- The EUR/GBP is strengthened around 0.8565 in the first bars of the European session on Wednesday.
- The UPC inflation of the United Kingdom fell to 2.6% year -on -year in March, compared to 2.7% expected.
- It is widely expected that the ECB reduces interest rates on Thursday, carrying its deposit rate to 2.25%.
The EUR/GBP crossing impulse about 0.8565 during the first bars of the European session on Wednesday. The sterling pound (GBP) weakens against the euro (EUR) after the inflation report of the United Kingdom consumer (CPI) index. Attention will focus on the data of the Harmonized Consumer Price Index (HICP) of the Eurozone, which will be published later on Wednesday.
The data published by the United Kingdom National Statistics Office on Wednesday showed that the country’s general CPI rose 2.6% year -on -year in March, compared to an increase of 2.8% in February. This reading was lower than the 2.7% expected. The underlying IPC, which excludes volatile food and energy prices, rose 3.4% year -on -year in March compared to the previous 3.5%, in line with the market consensus of 3.4%.
Meanwhile, the monthly inflation of the United Kingdom CPI softened 0.3% in March from 0.4% in February. The markets projected an increase of 0.4%. The sterling pound remains weak in an immediate reaction to the inflation data of the United Kingdom CPIs than expected.
In the front of the euro, the markets are completely valuing an additional cut of 25 basic points by the European Central Bank (ECB) to 2.25% on Thursday. The ECB reduced interest rates for the second consecutive time in March, carrying the deposit rate to 2.5%. An additional reduction would see the rate down 2.25%. Bas Van Geffen, a senior macro strategist in Rabobank, said that the confusion caused by Trump’s tariffs could lead to a 25 -bsa cut, since short -term uncertainties remain a source of concern.
LIBRA ESTERLINA FAQS
The sterling pound (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most commercialized currency exchange unit (FX) in the world, representing 12% of all transactions, with an average of $ 630 billion a day, according to data from 2022. Its key commercial peers are GBP/USD, which represents 11% of FX, GBP/JPY (3%) and EUR/GBP (2%). The sterling pound is issued by the Bank of England (BOE).
The most important factor that influences the value of sterling pound is the monetary policy decided by the Bank of England. The Bank of England bases its decisions itself has achieved its main objective of “price stability”: a constant inflation rate of around 2%. Its main tool to achieve this is the adjustment of interest rates. When inflation is too high, the Bank of England will try to control it by raising interest rates, which makes access to credit for people and companies more expensive. This is generally positive for sterling pound, since higher interest rates make the United Kingdom a more attractive place for global investors to invest their money. When inflation falls too much it is a sign that economic growth is slowing down. In this scenario, the Bank of England will consider lowering interest rates to reduce credit, so that companies will borrow more to invest in projects that generate growth.
Published data measure the health of the economy and can affect the value of sterling pound. Indicators such as GDP, manufacturing and services PMI and employment can influence the direction of the sterling pound.
Another important fact that is published and affects the pound sterling is the commercial balance. This indicator measures the difference between what a country earns with its exports and what you spend on imports during a given period. If a country produces highly demanded export products, its currency will benefit exclusively from the additional demand created by foreign buyers seeking to buy those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
