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Banks call time on the Pounds Stella rise. Forex education for beginners GB

We are trading the GBP/USD EUR/GBP today.

Why? today's rate decision, mixed with economic uncertainty after a recent bounce and unhindered inflation makes us believe that Sterling will wobble today.

big ben spire showing clock in blue sky and clouds

Read what banks are predicting.

According to Deutsche Bank, strategists at one of the world's largest primary brokers of foreign exchange, the pound's rise may soon pause. Although the bank had been bullish on the pound against the U.S. Dollar and Swedish Krona since January, they no longer believe that it presents an attractive risk-reward in the short term. The call comes as the GBPEUR has advanced 1.87% in 2023, with gains of 4.40% in GBPUSD since the start of the year. The UK currency has risen against all its G10 peers this year due to the country's economy outperforming expectations. While UK data surprises are still positive, the market has covered its long-held short position heading into the Bank of England meeting, and the risks around the meeting are still skewed towards the MPC erring dovish, says Gopal.

Meanwhile, analysts at Goldman Sachs have upgraded their tactical stance on the British Pound to "outright constructive" due to surprising UK economic resilience and fading central bank divergence risks.

GBP/USD forex currency and commodities price bar chart with green & red candles showing a trading trend over a 4 hour time frame; indicators include moving average and Bollinger bands plus Relative strength indicator.

Francesco Pesole, FX Strategist at ING Economics, suggests that the Pound Sterling's resilience in the face of recent market volatility and a stronger US Dollar may be due to long GBP positions maintained by markets ahead of the upcoming Bank of England (BoE) announcement. Pesole attributes the Pound's outperformance over the Euro largely to market expectations for a hawkish turn from the BoE, with 70 basis points of monetary tightening still anticipated this year. However, Pesole does not believe that the current weakness of the EUR/GBP exchange rate is a sustainable trend and suggests that the upcoming BoE meeting could mark the end of the current cycle of rate hikes, resulting in the Sterling losing some of its strength against the Euro as its interest rate advantage fades.

Pesole forecasts the Euro-Sterling to climb back up to 0.90 by the end of the year, challenging the current market expectation of continued GBP strength, which equates to a fall to 1.11 in the Pound to Euro exchange rate.

EUR/GBP forex currency and commodities price bar chart with green & red candles showing a trading trend over a 4 hour time frame; indicators include moving average and Bollinger bands plus Relative strength indicator.

Trading GBP in the Forex market involves buying or selling the British pound against another currency, such as the US dollar, the euro, or the Japanese yen. Here are some steps to help you get started:

  1. Choose a Forex broker: Before you can trade GBP, you'll need to find a reputable Forex broker that offers GBP pairs. Look for a broker that is regulated by a reputable financial authority, has low trading fees, and offers a user-friendly trading platform.

  2. Learn about GBP pairs: You should familiarize yourself with the GBP pairs you plan to trade. Study their historical performance, understand their correlation with other currencies, and monitor economic events and news that may impact their value.

  3. Develop a trading strategy: A trading strategy is a set of rules you follow when making trading decisions. Your strategy should include your entry and exit points, risk management rules, and other key factors. Back-test your strategy on historical data to see how it performs.

  4. Open a trading account: Once you have chosen a broker and developed a trading strategy, you can open a trading account. You'll need to provide some personal and financial information and fund your account with a deposit.

  5. Start trading: Once your account is funded, you can start trading GBP pairs. Monitor the markets and make trades according to your trading strategy.

Remember that trading Forex involves risk, and you should never risk more than you can afford to lose. It's important to manage your risk carefully and always use stop-loss orders to limit your losses.


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