- The GBP/USD lacks an intra -firm direction firm and oscillates in a range at the beginning of a new week.
- The USD preserves the recovery profits last week since a minimum of several years and acts as a wind against.
- Betting for a less moderate BOE and hopes of a commercial agreement between the United Kingdom and the US to limit the fall of the pair.
The GBP/USD torque begins the new week with a tone off and oscillates in a narrow range around the round level of 1,3300 during the Asian session.
The US dollar (USD) preserves the recovery profits last week since a minimum of several years amid the uncertainty about commercial conversations between the US and China, which, in turn, is considered a key factor that acts as a wind against for the GBP/USD torque. The US Treasury Secretary, Scott Besent, said Sunday that he didn’t know if the US president Donald Trump had spoken with Chinese President Xi Jinping. This maintains a limit on the optimism generated by Trump’s statement that tariff conversations with China were underway and support the status of a relative secure refuge of the USD.
The sterling pound (GBP), on the other hand, receives some support from the optimistic national data published on Friday and the hopes that the United Kingdom will soon achieve a commercial agreement with the USA. In fact, retail sales of the United Kingdom unexpectedly increased 0.4% in March after the growth reviewed down of 0.7% of the previous month. For the first quarter as a whole, retail sales increased 1.6%, marking the strongest reading in four years and moderating market expectations on a more moderate rates clippings by the Bank of England (BOE) in the future.
In contrast, operators have been valuing the possibility that the Federal Reserve (Fed) resumes its cycle of feat cuts in June and reduces indebtedness costs at least three times by the end of this year. This, together with the concerns about the economic repercussions of Trump’s commercial policies, is braking the USD bulls when opening new positions and providing some support to the GBP/USD. Therefore, it will be wise to expect a strong sale of continuation before positioning for any significant drop in cash prices.
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.
