Presently, the conversion rate of sol to pounds (1 SOL ≈ 118.5 GBP) is based on multiple interconnected factors: Technically, the SOL/GBP RSI index is 56 (strong to neutral), the MACD histogram has been red for consecutive days, and the Bollinger Bands have tightened to 8.7 GBP (14% month-over-month decline in volatility). If it breaks the resistance level of 123.6 GBP (the July high), the quantitative model is predicting a 62% chance of an increase. Contrary indicators have been published by the derivatives market, however – the Bitget perpetual contract funding rate is at 0.04% (long positions dominate), while Deribit’s SOL/GBP put option open interest has increased 23% over the week, taking the probability of a short-term correction to 41%.
Environmental events cause market sentiment. DeFi TVL on Solana network grew 2.3% today to £5.43 billion, with the SOL-GBP Cashio liquidity pool of the GBP stablecoin protocol reaching above £90 million and achieving a minimum of 0.015% slippage, which brought in market maker Wintermute to close one £5.8 million carry trade. Estimated annualized return on investment is 36%. Visa revealed that its Solana pound settlement pilot has reached the second phase. The cost of one million-pound transaction is as low as 0.3 GBP (the usual charge of legacy banks is 25 GBP), causing the on-chain exchange volume of sol to pounds to increase by 19% to 110 million pounds within a day.
Macro and exchange rates are extremely interdependent. The UK’s underlying CPI in July was 4.6% year-over-year (as expected 4.5%). The probability that the Bank of England will raise interest rates by 25 basis points rose to 52%. It would, if it did so, lead to a 1.2% appreciation of the pound against the US dollar, lowering the sol to pounds exchange rate indirectly. But with 72% chance of CME the anticipation of Federal Reserve cutting the interest rate in September favors speculative instruments. The correlation coefficient between SOL and Nasdaq index has already reached 0.48 on a 30-day period basis. Technology stock boom could send SOL/GBP higher concurrently. Information from Bloomberg suggests that for every 1% drop in the pound the SOL/GBP rate goes up, on average, by 0.4%.
Regulatory hazards and liquidity dislocations. The US SEC investigation into Coinbase listing of SOL is still in progress. Its sale resulted in a 4.3% intraday decline in sol to pound on 18th July. FCA in the UK suspended its AML review of Binance UK and placed its SOL/GBP trading pair on freeze for three days when its market spread opened up to 1.5%. But the compliant Coinpass exchange managed to achieve instant delivery of the pound through Faster Payments, with 0.15% processing fees, and there was an increase in users by 29% this week. On-chain metrics report that the share of SOL swaps executed by compliant actors is up from 58% to 73%, and the cost of compliance has made the price 1.8% higher than on the dark web.
On-chain activity vindicates short-term trends. The active Solana addresses numbered 1.41 million today (22% year-on-year growth), and 28% of the addresses participated in sol to pounds trades, while Gas consumption was at 18%. Whale Address (> 100,000 SOL) added a net of 2.67 million SOL (approximately 316 million pounds) to its reserves this month with an average cost of 116.2 GBP, with floating profit of 2.1%. But the retail investors (<100 SOL) saw a net outflow of 1.8 million (approximately 213 million pounds) over the week, showing the disparity in the retail market. For staking, the annual return of SOL is 5.8% (approximately 6.87 GBP/SOL), significantly higher than the UK average rate of interest on savings of 4.1%, attracting 23,000 users to stake their holdings.
Expectations of technological upgrading and enhanced network resilience. Solana is set to complete the Firedancer upgrade in September, with the aim of increasing the TPS from 65,000 to 1 million and reducing the network failure rate from an average of 7 times per year to 0.1 times. If successful, historical backtesting indicates that the SOL/GBP price will rise by 15% within 60 days (2023 mainnet upgrade case). But if the upgrade is delayed, short-selling pressure will take advantage of the opportunity to push the price down to the 113.2 GBP support level (30-day moving average).
Geopolitical and fiat currency crisis examples attest to the demand. In Argentina (with an annual inflation rate of 289%), the premium rate of sol to pounds for domestic peso value is as high as 22% (1 SOL ≈ $2,050 vs.) The international price is 1,662 US dollars. When the Ukrainian conflict intensified, over 1.2 million pounds’ worth of SOL entered local crypto donation addresses in a single day, raising the SOL/ hryvner exchange rate by 11% in a single day. If inflation expectations rise worldwide (currently 4.1%), demand for SOL as an anti-inflationary asset could drive its pound value higher.
in summary, the sol to pounds price today was influenced by different factors such as expectation of technical progress (Firedancer), regulatory uncertainties (SEC inquiry), pound’s monetary policy (CPI stats), and on-chain activities (growth in holdings of whales). Short-term speculators should look out for resistance of 123.6 GBP and support at 113.2 GBP. Long and medium-term investors can wager SOL to get a 5.8% return and monitor macroeconomic change indicators (such as the Fed’s interest rate reduction implementation).