GBP/USD Parite

GBP/USD, THE CABLE

The GBP/USD (British Pound/U.S. Dollar) is the abbreviation for the British pound and U.S. dollar currency pair. Also called “the cable”, this cross belongs to the group of Majors. The GBP/USD tends to have a negative correlation with the USD/CHF and a positive correlation to the EUR/USD currency pairs. The Sterling is one of the four most liquid currencies in Forex and one of the reasons is the highly developed capital market. While 60% of the volume of foreign exchange are made via London, the GBP is not the most traded currency but is quite popular due to the good reputation of the UK monetary policy and a high interest rate.

The GBP/USD reached an all time high of 2.4546 in November 1980 and a record low of 1.0339 in September 2022.

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GBP/USD FORECAST 2025

Contrasting economic outlooks on both sides of the Atlantic will likely cause the Fed and BoE policy divergence to stand out in the year ahead. The US economy continued to show resilience, with the real GDP expanding at a solid 2.8% annualized rate in the Q3 of 2024. On the other hand, the British economy showed no growth in Q3.

The implications of incoming US President Donald Trump’s trade policies and mounting concerns over the UK economic slowdown will continue to act as a headwind for the GBP/USD in the year ahead. The US and UK central banks’ policy mix will also play a pivotal role in the pair’s price direction as markets remain wary about unprecedented geopolitical risks in 2025.

Read the GBP/USD Forecast 2025 by Dhwani Mehta.

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MOST INFLUENTIAL CURRENCIES FOR GBP/USD

Other currencies relate to the GBP/USD pair and can have influence on it as well: USD, EUR,CAD and YEN. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD, USD/CAD, GBP/JPY and EUR/JPY

MOST INFLUENTIAL ORGANIZATIONS FOR GBP/USD

The Bank of England is probably the organization that impacts the most the GBP/USD. It has a wide range of responsibilities, similar to those of most central banks around the world. It acts as the government's bank and the lender of last resort. It issues currency and, most importantly, it oversees monetary policy. Andrew Bailey is the new Governor of the Bank of England since 16 March 2020. Her Majesty the Queen has approved the appointment. He is widely and deeply respected for his leadership managing the financial crisis, developing the new regulatory frameworks, and supporting financial innovation to better serve UK households and businesses.

The US Central bank, the Federal Reserve of the United States, is also closely related to the pair. Inside that institution, the Board of Governors (also known as the Federal Reserve Board) is carefully observed. The board meets several times per year and announces the interest rates. If rates remain unchanged, attention turns to the tone of the FOMC (Federal Open Market Committee) statement, and whether the tone is hawkish, or dovish over future developments of inflation.

The City of London includes a lot of organizations and institutions that might impact the cable, in particular the London Stock Exchange, the third-largest stock exchange in the world. The LSE allows companies to raise money, increase their profile and obtain a market valuation through a variety of routes, thus following the firms throughout the whole IPO process.

The European Central Bank also has influence on the cable due to the importance of business and trade between the UE and the UK. Any assessment of possible scenarios linked to a macroeconomic decision taken by the ECB has impact on the commercial partners of the Eurozone. The Euro is the second reference currency in the world (after the US Dollar) and any move by its central bank, the ECB, has consequences on the assessment of its partners.