British Pound Latest – GBP/USD and EUR/GBP Highlight Sterling’s Strength

British Pounds / US Dollars the pricesGraphs and analysis

• The British Pound boosted interest rate hike expectations.
• Next week’s major economic data and events will drive GBP/USD and EUR/GBP.

The British Pound is closing a positive week in full swing, showing decent gains against a host of other G7 currencies. On a weekly basis from low to high, Cable is up about 2 cents, GBP/JPY is up about 2.5 Yen, while EUR/GBP is down the better part of 1 Euro. While all of these currencies are a bit weak, Sterling was in for a better bid all week as expectations continued to build that the Bank of England may have to rise more aggressively in the coming months to calm inflation. UK inflation is expected to decline over the coming months and may make current market expectations of a 100bps hike in UK interest rates look somewhat hawkish.

Next week’s economic data and economic calendar are full of market moving potential. Just a look at the UK, US and Euro releases highlights that GBP/USD and EUR/GBP could be volatile, especially with the US Federal Reserve and European Central Bank’s midweek decisions.

See all market-moving events and data releases in real time DailyFX calendar

British Pounds / US Dollars It is back above the previous resistance seen around 1.2550 and continues to rise. Thursday’s bullish candle took out both the 20 and the 50 day SMA, and if the pair can hold above these two technical indicators, GBP/USD could have enough strength to test its multi-month high around 1.2680.

GBP/USD daily price chart – Jun 9, 2023

Retail traders of GBP/USD are short net cable

Retail trader data shows that 36.30% of traders are net long, with the ratio of short-to-long traders at 1.75 to 1. Net purchase is 23.70% lower from yesterday and by 9.07% less than last week, while the number of Net short traders is 43.64% Higher than yesterday and 12.00% higher than last week.

We usually take a view contrarian to crowd sentiment, and the fact that traders are short on the bargain suggests that GBP/USD prices may continue to rise. Traders are getting tougher than yesterday and last week, giving us the mix of current sentiment and recent changes Stronger bullish contrarian trading bias for GBPUSD.

EUR/GBP Traders will focus on the recent ECB interest rate decision as the market is strongly anticipating another 25 basis point rate hike. The recent weak growth figures for the fourth quarter of 2022 and the first quarter of 2023 show that the bloc is in a technical recession and the ECB will have to tread carefully in the coming months so as not to over hike interest rates should this economic slowdown take hold.

The EUR/GBP is currently at a nine-month low and may continue to move. The three moving averages are lined up in a bearish formation, making the pair vulnerable to further losses. EUR/GBP is oversold but not by much and while this may need a correction it is on the path of least resistance for EUR/GBP which is lower. Thursday’s ECB meeting will be crucial for the pair.

EUR/GBP daily price chart – June 9, 2023

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