- The GBP/USD weakens around 1,3425 in the first measures of the Asian session on Tuesday.
- Improved optimism on commercial tensions supports the US dollar and creates a wind against the pair.
- Investors prepare for the speech of Dave Ramsden of the BOE later on Tuesday.
The GBP/USD torque attracts some sellers about 1,3425 during the first hours of Asian negotiation on Tuesday, pressed by a modest rebound of the US dollar (USD). Investors expect a speech by the official of the Bank of England (BOE), Dave Ramsden, in search of a new impulse.
The US dollar is strengthened against the sterling pound (GBP) as fears on commercial tensions decrease. China exempt some US imports from its 125% tariffs on Friday, which increases the hopes that the commercial war between the US and China is close to its end, although China quickly denied the statement of US President Donald Trump that commercial conversations between the two countries were underway.
The US Secretary of Agriculture, Brooke Rollins, said Sunday that the Trump administration is having daily conversations with China about tariffs. Rollins added that there were ongoing conversations between the two nations and that the trade agreements with other countries were “very close.”
In the front of the GBP, the firm expectations that the BOE will cut the interest rates at 25 basic points (BPS) to 4.25% at the May meeting continue to weigh on the GBP. Investors will be very attentive to a speech by the official of the Bank of England (BOE), Dave Ramsden, later on Tuesday. Any moderate comments could weaken the cable in the short term.
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.
