- The pound is ready to end the week positively as the unemployment applications in the US exceed expectations, housing data send mixed signals.
- Une.UU unemployment requests fall to 215K, below estimates, reinforcing a resistant labor market perspective.
- Strong salary growth in the United Kingdom contrasts with inflation in cooling, keeping speculation about BOE features alive after Easter.
The sterling pound remained stable against the US dollar on Thursday after US economic data suggested that the labor market is still solid, while housing data were mixed. At the time of writing, the GBP/USD quotes at 1,32505, rising 0.11%.
The GBP/USD advances in a scarce trade and solid labor data from the US; The United Kingdom markets prepare for a prolonged Easter closure
The US economic agenda was slightly occupied with the publication of initial unemployment applications, which reached below the estimates, a positive reading for the labor market. The applications in the week that ended on April 12 increased to 215K, coming down from 224k, below the 225K forecasts.
As for housing data, construction permits grew 1.6%, from 1,459 million to 1,482 million, above 1.45 million estimates. However, the beginnings of construction disappointed investors, falling from 1,494 million to 1,324 million.
On the other side of the Atlantic, the economic data of the United Kingdom showed that growth is increasing and salaries remain strong. Meanwhile, inflation data suggests that the Bank of England (BOE) could reduce loan costs.
Meanwhile, the GBP/USD could continue to operate volatile in the middle of low volume conditions. The United Kingdom markets are closed on Friday and Monday by a prolonged Easter break.
On this week’s agenda, the US economic agenda will have more Fed speeches.
GBP/USD price forecast: technical perspective
The GBP/USD is prepared to extend its rally, but most likely it remains below the weekly maximum of 1,3291 established on April 16, since investors are directed to Easter rest, which affects negotiation volumes. Although the relative force index (RSI) suggests a greater rise, buyers need to recover 1,3300 to challenge the peak of October 1, 2024 in 1,3389, before 1.34.
For a bearish continuation, operators need to push the GBP/USD below the figure of 1,3200, to test the minimum of April 15, 1,3163.
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.
