GBP/USD stalls as Bailey flags services inflation

熱門文章

GBP/USD was essentially flat on Tuesday, drifting around 1.3500 in a quiet session.

Pound Sterling treads water near 1.3500 as BoE Governor Bailey calls the March rate decision a "genuinely open question."
The BoE held rates at 3.75% in a narrow 5-4 vote in February, with Governor Bailey telling parliament on Tuesday that services inflation has not eased as much as expected, keeping a March cut uncertain.
January FOMC minutes showed several Fed officials discussed possible rate hikes if inflation stays above target, reinforcing the extended pause at 3.50% to 3.75%.

GBP/USD was essentially flat on Tuesday, drifting around 1.3500 in a quiet session. The pair has pulled back sharply from its late-January high near 1.3870 and is now consolidating in a tight range around the 50-day Exponential Moving Average (EMA), with a cluster of mixed candles over the past two weeks suggesting indecision after the sell-off.

The Bank of England (BoE) held rates at 3.75% in February by a narrow 5-4 vote, with Governor Andrew Bailey casting the deciding vote to hold. Testifying before parliament's Treasury Committee on Tuesday, Bailey said a March rate cut is "a genuinely open question," noting that services price inflation came in at 4.4% in January, well above the BoE's 4.1% forecast. Chief Economist Huw Pill echoed the caution, warning against being "beguiled" by headline inflation falling toward the 2% target. UK data has otherwise been encouraging, with February's PMI showing private-sector activity expanding at its fastest pace since April 2024 and January retail sales beating expectations.

On the US Dollar (USD) side, the Federal Reserve (Fed) held rates at 3.50% to 3.75% in January, with minutes released last week showing several participants discussed the possibility of raising rates if inflation remains above target. US consumer confidence edged up to 91.2 in February, though the expectations component has now spent 13 consecutive months below the 80 recession-warning threshold. Trump's new 15% global tariffs continue to weigh on risk sentiment, though existing trade arrangements with the UK are expected to remain in place for now.

Consolidation around the 50-day EMA as Stochastic drifts in oversold territory

The pair has fallen back to the 50-day EMA near 1.3520, which is acting as a pivot after holding as support through the January rally. The 200-day EMA around 1.3330 continues to rise and is well below current price action, keeping the broader uptrend from the late-2025 lows valid. The Stochastic Oscillator has crossed bearish and is drifting in the oversold zone, suggesting the pullback from the 1.3870 high is getting stretched to the downside. A break below 1.3430 would open a path toward the 200-day EMA, while a reclaim of 1.3600 would be the first sign of buyers re-engaging toward the year-to-date high.

GBP/USD daily chart

Pound Sterling FAQs

What is the Pound Sterling?

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

How do the decisions of the Bank of England impact on the Pound Sterling?

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

How does economic data influence the value of the Pound?

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

How does the Trade Balance impact the Pound?

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.