The truth is that both probably matter, present and future, and that helps to avoid focusing on obscure data or views that the general public will unlikely see. The other major school is the focus on historical price patterns in the GBP USD, this school of thought is called technical analysis. Here, the general idea is to follow the GBP USD price trend and trade with it or try to figure out when the trend will reverse, or try to forecast when a trend will commence.

It is because technical analysis focuses only on what happened in the past, and how this might repeat itself. It does not focus on the factors that affect importers and exporters, investors, or central bankers. Macroeconomic analysis is good with long term direction, but terrible in pinpointing where the price should be in the short-term.

This does, however, not exclude macroeconomics altogether, because major macroeconomic events happen almost every week, which means that short-term traders need to keep an eye on the economic calendar to know when market volatility in the GBP USD could spike. At its core, the rectangle pattern is when the GBP USD pair is trapped by a well-defined price floor, and a well-defined price ceiling, the former is called support, and the latter is called resistance.

As you can see, the support comes in at 1. The difference between these two levels is 0. This means that when the price trades below 1. How much could the price decline? Per the rectangle pattern, the difference between the support level at 1. If the price would trade above 1.

Trading when the price breaks the support or resistance levels is called breakout trading and is probably the easiest way to trade as it is clear what one should do when the price breaches the range. Armed with the rectangle pattern you can look for this chart pattern in the various time frames like the five-minute chart if you are interested in short-term trading, or maybe the four-hour or daily chart for longer-term trading.

In general, the smaller the time frame such as the five-minute chart, the higher the risk that the pattern will not work well. We can see that the worst year since was in , the GBP lost Whilst the best year was in when the British Pound gained 9. We, therefore, have a rough idea with the help of the data above what to expect from the GBP USD information of gains or losses. Interest rates The cost to borrow or lend money is a key factor for currency traders.

If there are no differences in the offers or risks of each bank, then the rational option is to place your , with a UK bank, as you will receive a higher return. High interest rates are also a symptom of high economic growth and or high inflation. High economic growth is good, whilst high inflation, the erosion of the value of money is not good.

Economic growth When economic growth is high in a country, interest rates, which are the cost of borrowing money, tend to rise as the competition to borrow money increases. As an example, Euro area interest rates have been low for a long time as the economic chances to invest are low, and as inflation is low. Whilst in many emerging markets, where there are a lot of opportunities to make business, more people will be interested to borrow money, and hence boost interest rates in that specific country.

High-interest rates will therefore attract money that would like to lock in the high returns with the banks. But also people that would like to invest in the country. Inflation High inflation means that the value of money is dropping, and that can discourage investment.

High economic growth and high interest rate tend therefore to attract capital flows, and that will boost the value of a currency. Whilst inflation will have the opposite effect. When investors invest in a country and its currency, they tend to look at relative economic growth, inflation, and interest rates and invest in the best-performing country. However, very few people do as the liquidity is very poor, meaning that the cost of trading GBP USD over the weekend is very high.

Also, because no important economic news is released over the weekend, there is little reason for GBP USD prices to change. Finally, because people know that there is no reason to trade over the weekend, very few people do it, instead, they take time off. However, market activity for said Pound Dollar currency pair is not always high.

Typically, most of the volume is executed within European business hours. The Japanese banks usually wait until afternoon for London and Frankfurt to come online before making their exchanges, thus the London foreign exchange sees a lot of trade activity and is the busiest at this time. After London time, trading volumes have already started to dwindle. But trading remains open as the US traders are still at their desks and will be joined by Asia once more.

Trading adapted for high volatility As trading is muted during the Asian trading session, most prices tend to remain in narrow price ranges. A range-bound GBP USD strategy means that we sell when the price reaches resistance and buy when the price reaches support levels. Also, because the price changes are small, people adapt and try to make many small profits.

To make it profitable to make money on small price changes, brokers like ATFX offer leverage, that way a small percentage change can be multiplied, e. Investors were also bracing for another interest rate increase from the Bank of England next week, pricing in on a 75bps hike that will push borrowing costs to a level not seen since The annual consumer inflation in the UK returned to a year high of Meanwhile, some of the upside momenta were also due to the dollar's weakness as soft US economic data sparked concerns about a recession.

Historically, the British Pound reached an all time high of 2. British Pound - data, forecasts, historical chart - was last updated on October of

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The trouble for sterling now is trying to identify what policy shifts are viable to support the pound — indeed should UK authorities decide that the pound needs supporting. As the guardians of price stability, a few are saying that the Bank of England BoE should jump in with a large inter-meeting right hike. We think that the BoE is too psychologically scarred from the events of to try defensive FX-related rate hikes — e.

A recourse to larger dollar Fed swap lines looks unlikely that line is already unlimited and is designed to address dollar funding challenges not balance of payments crises. Equally, we think sterling would have to fall a lot further before more credible talk emerged of the UK seeking the first supranational support since The UK current account is being eroded by high energy prices and Brexit.

The domestic growth picture remains very weak. The UK is set to fund around GBP bn worth of spending across energy price support for households and businesses combined with broad tax cuts via gilt issuance. Bank of America BofA Global Research said in a note on 17 June that supply challenges could worsen over the coming months if the EU fully implements its plan to curb Russian crude oil and petroleum product imports to a trickle.

However, it projected the tight global oil market could balance out heading into the second half of this year and BofA forecasts global oil demand to rise 0. As market volatility makes it increasingly difficult to make long-term projections, neither BofA and ANZ Research provided an oil price forecast for , nor did either institution offer an oil price forecast for It expected global oil consumption growth to continue declining over the next two years.

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