The British Pound (GBP) experienced broad-based pressure against major currencies on Monday, driven by a combination of strong US economic data, UK political uncertainty, and weak Eurozone industrial figures. Against the US Dollar (USD), GBP/USD traded marginally lower near 1.3338 during the European session, hitting a near three-week low of 1.3316 as the US Dollar outperformed. This move was fueled by growing expectations of a Federal Reserve interest rate hike, with the CME FedWatch tool showing the probability of at least one hike this year rising to 74.2% from 45.2% a week ago, following robust US Nonfarm Payrolls data for May that reported 172K new jobs versus an 85K estimate [1]. The US Dollar Index (DXY) held steady near 100.10, reflecting the Greenback's strength [1].
Technical analysis for GBP/USD indicates a bearish near-term bias, with the pair trading below the 20-day EMA at 1.3434 and the Relative Strength Index (RSI) near 38, suggesting further downside risk. The pair is also trading within a symmetrical triangle, pointing to a sideways but pressured trend [1]. Key upcoming data releases include the US Consumer Price Index (CPI) for May and UK Gross Domestic Product (GDP) for April, scheduled for Wednesday and Friday, respectively, which are expected to be major triggers for the pair [1].
In the GBP/JPY cross, the Pound staged a modest recovery from a one-week low around 213.30 but remained below the 214.00 mark. The Japanese Yen (JPY) was supported by better-than-expected Q1 GDP growth of 0.5%, which exceeded consensus estimates and increased speculation that the Bank of Japan (BoJ) may raise rates at its June 15-16 meeting. However, intervention risks and ongoing concerns about Japan's economic outlook due to Middle East tensions limited further JPY gains. Meanwhile, UK Prime Minister Keir Starmer's authority was described as 'severely shaken' following the resignation of junior ministers, adding to political uncertainty and weighing on the Pound [2].
Against the Euro, the Pound saw some support as EUR/GBP retreated from session highs near 0.8650 to trade at 0.8637. This move followed disappointing German Factory Orders data, which showed a 3.8% drop in April, significantly worse than the 1.2% decline expected, and a downward revision of March's increase to 4.5% from 5.0%. Technical analysis suggests a neutral-to-bearish momentum for EUR/GBP, with the pair trading in a symmetrical triangle and a bearish outcome favored if sellers confirm below Friday's low at 0.8630 [3].
Currency heat maps across the articles confirm the Pound's relative weakness against the USD and JPY over recent periods, while the Euro also struggled amid weak German data [1][2][3].
CONCLUSION
The British Pound is under pressure across major currency pairs, driven by strong US economic data, heightened Fed rate hike expectations, and UK political instability. Technical indicators and upcoming economic releases suggest further volatility ahead for GBP crosses. Market participants are likely to remain cautious until clearer signals emerge from key data and political developments.