If spoken about world’s oldest currency pairs on foreign exchange market, GBP against USD will top the chart. The pairing has an interesting history that brought them the name, ‘Cable’. Reason being transmission of exchange rate happened over the first transatlantic communication cable connecting the United States and Great Britain. Today, due to the massive size of the economy of United Kingdom, GBP/USD forecast remains to be a huge interest amongst traders.

Note from history for USD forex forecast:

Currency quotes on these two countries were the first primary information that was exchanged on this cable.

GBP – Accounting for about 13% daily trade volume in FX, British pound holds one of the world’s highest volumes. It is also referred to as sterling.

USD – US economy being the largest single economy in the globe, USD holds a dominant position in the currency market globally. It is also a default currency for most of the transactions in commodities market.

Explaining GBP/USD forecast:

Clearly, Great Britain Pound is the base currency and US Dollar is the counter currency. GBP/USD pair value breaks into 1 GBP per X USD. Suppose, 1.50 is the value on which this currency pair is trading at. That denotes you need 1.50 USD for purchasing 1 GBP.

Why is GBP/USD so significant?

This currency pair appropriately reflects a huge part of financial transactions in the global sphere. And their movement dictates the fluctuating prices on a daily basis. So, it is important for every trader to understand the major dynamics of GBP to USD forex forecast.

There are some good reasons why this currency pair is so significant.

  1. Both have a sheer size representing the global economy. So, trading with these pairs is safe.

  2. Again, London is taken to be the hub of forex trade. Around 35% of FX trading is done through London.

  3. GBP and USD are known as ‘majors’. They are equally popular in economic activities of the respective countries.

  4. Both United States and the United Kingdom follow the ‘free floating exchange policy’. Meaning, daily exchange rate movements are determined by market.

  5. This is a volatile pair; however, recent years have seen them to be in a fairly stable condition compared to other majors.

The currencies, especially GBP experience quite sharp fluctuations that attract investors and hence fx traders. And this pair makes 85% of all currency cross rate trades that are happening at the same time.

What factors can affect forex forecast GBP/USD?

While doing GBP/USD exchange rate forecast, you need to note that there are a number of factors influencing the value of these two currencies and their relation with others.

  1. Growth in economy:

Whenever either of the economies experiences growth, its exchange rate also rises. A trader can measure this economic growth through GDP reports that are released after every quarter in both countries to analyse forex forecast GBP/USD.

  1. Unemployment:

If you want to measure the economic status of the United States or the United Kingdom, labour markets are a wonderful tool. Whenever there is a positive trend in the employment sector, there is a possibility of a rise in the GDP. Traders can monitor reports like UK ILO labour market and US Non-farm payrolls that are released after every month for USD forex forecast.

  1. Inflation for USD forex forecast:

Whether a country’s economy is overheating or stalling, or the pace at which price is falling and rising, can be best measured by inflation. In fact, Central banks use this indicator to frame their monetary policies. Hence, it is an equally important tool for GBP/USD forecast in forex market.

  1. Difference in interest rates:

The IRD or Interest Rate Differential between Fed (Federal Reserve) and BoE (Bank of England) is going to influence values of both GBP and USD. Take an instance, if the BoE interferes in market that is aiming at strengthening British pound, there will be a rise in GBP/USD value. Again, when Fed intervenes, value of this currency pair will fall.

Central bank decisions are major GBP/USD exchange rate forecast tools as they influence the market a lot. Both Bank of England (UK) and US Federal Reserve Bank organise meetings on monetary policy, usually on a monthly basis. The outcomes of these meetings have a great contribution, even in GBP/USD long term forecast.

General factors affecting GBP/USD long term forecast:

  1. Present situation of Export-Import flows between Britain and US

  2. Capital flow between Great Britain and America

  3. Fluctuation Limits of exchange rate set by the government

  4. Borrowing cost

  5. Trade balance

  6. Relative Growth

  7. Expenditure on buying stock or bond

Brexit influencing GBP USD exchange rate forecast:

The market had experienced a significant move from the Brexit case when the voters of the United Kingdom had surprisingly decided to leave the EU (European Union). Needless to say, this decision caused a shocking move in the UK politics as well as Her Majesty’s currency. (News: David Cameron, Nigel Farage resignation and struggles of Jeremy Corbyn). How did this incidence affect GBP/USD forecast?

Well, Brexit (‘British’ and ‘Exit’) has sent the levels of GBP/USD to what was seen last in 1985. And now, GBP/USD exchange rate forecast varies by timeframe.

Forecast of GBP/USD for 2016 – 2017:

According to GBP/USD live forecast, the latest exchange rate of this currency pair is 1.3032 and day’s range is between 1.3030 and 1.3090. 1.3080 being previous day’s rate, change is -0.37%. Here is a brief on what to expect in the coming months;

GBP/USD forecast

September 2016 

  1. Exchange rate on beginning: 1.31

  2. Maximum and minimum: 1.34 and 1.27 (respectively)

  3. Averaged rate: 1.31

  4. Forecast for GBP: 1.30

  5. September change: -0.76%

December 2016 

  1. Exchange rate on beginning: 1.26

  2. Maximum and minimum: 1.31 and 1.25 (respectively)

  3. Averaged rate: 1.27

  4. Forecast for GBP: 1.28

  5. December change: 1.59%

GBP/USD long term forecast, 2017:

January 2017 

  1. Exchange rate on beginning: 1.28

  2. Maximum and minimum: 1.34 and 1.28 (respectively)

  3. Averaged rate: 1.30

  4. Forecast for GBP: 1.31

  5. January change: 2.34%

April 2017 

  1. Exchange rate on beginning: 1.28

  2. Maximum and minimum: 1.34 and 1.28 (respectively)

  3. Averaged rate: 1.30

  4. Forecast for GBP: 1.31

  5. April change: 2.34%

July 2017 

  1. Exchange rate on beginning: 1.21

  2. Maximum and minimum: 1.21 and 1.17 (respectively)

  3. Averaged rate: 1.19

  4. Forecast for GBP: 1.19

  5. July change: -1.65%

September 2017 

  1. Exchange rate on beginning: 1.17

  2. Maximum and minimum: 1.18 and 1.14 (respectively)

  3. Averaged rate: 1.16

  4. Forecast for GBP: 1.16

  5. September change: -1.85%

December 2017 

  1. Exchange rate on beginning: 1.19

  2. Maximum and minimum: 1.24 and 1.19 (respectively)

  3. Averaged rate: 1.21

  4. Forecast for GBP: 1.22

  5. December change: 2.52%

More on GBP/USD exchange rate forecast:

As per GBP/USD forecast, in the coming days, a lot of factors are going to affect the currency movements like Article 50, US Federal Reserve prospects, Northern Ireland, European Reaction, Scotland, 2017 election prospects in Germany and France, their dealings with Brexit, ECB’s actions, austerity policy. All these will come in the ‘cable’ mix. However, there is a ray of hope that depends on negotiations’ characters. The British pound is expected to recover soon, pushing the levels towards 1.40.

Additional Information

Ideal time to trade GBP/USD:

London session is a major factor in the forex market, and most intraday traders prefer to trade when volatility begins to rise, from opening of session till its closing. The reason being this session often overlaps with trading sessions of the United Kingdom and Asia. Traders are likely to get powerful intraday moves during the first hour.

As per UK time, 0800 hours and 1600 hours are the opening and closing times of London session. Again, 1300 hours is the opening time of New York or US trade sessions. According to an FX trader, “Ideal time usually varies as per your trade strategy.”

The bottom line is to trade with the right strategy at the right time after a best accurate forex forecast. Hence, both being dominating currencies, if you can do a strong GBP/USD forecast, you can make huge profitable returns on GBP/USD from the forex market. All the best!

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