- The GBP/USD reached a new six months in 1,3256 on Wednesday.
- The markets have largely incorporated a 90% probability of a rate cut in May, according to interest rates.
- The next US retail sales data could offer new perspectives on the impact of tariff concerns on consumer behavior.
The GBP/USD pair continues its winning streak that began on April 8, quoting around 1,3250 during the Asian session on Wednesday. Earlier in the day, it played a new six months in 1,3256. The torque has maintained a strong impulse, driven by an improvement in the feeling of global risk after the US president, Donald Trump, announced exemptions for key technological products of his new “reciprocal” tariffs.
In the United Kingdom, labor market data showed on Tuesday that the unemployment rate remained stable at 4.4% in February, in line with expectations. However, salary growth remained robust, maintaining pressure on the Bank of England (BOE).
The BOE has refrained to make monetary policy more flexible, citing the persistent salary fortress. However, interest rates are suggested that markets have already incorporated a 90% probability of a rate cut in May, with expectations of two additional cuts later this year.
Now all eyes are placed in the data of the United Kingdom Consumer Price Index (CPI) for March, which will be published later on Wednesday. Economists predict that the underlying IPC – which excludes food and energy – will remain stable in 3.5% year -on -year.
Meanwhile, the US dollar index (DXY), which measures the US dollar in front of a basket of six main currencies, is quoting down near 99.80. Later in the day, attention will focus on US retail sales data for March, which could offer new perspectives on the impact of tariff concerns on consumer behavior.
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.
