- Tariff holders dominate global markets while US president, Trump, attacks the stability of world trade.
- A wide cut of US tariffs has affected the feeling of the global market.
- A last minute aversion to the tariffs of Mexico has increased the hopes of investors that a global commercial war may not happen.
The GBP/USD stirred on Monday, falling 1.5% during the night session before recovering and being flat for the day in the 1,2400 area. The US import tariffs that are brewing in a large -scale global commercial war affected the feeling of the market during the weekend.
USA Imported from the EU. However, Mexico was able to obtain an extension of one month from the US tariff to relieve tariffs. Donald Trump specifically expressed his desire for agreements of “rare metals” of Ukraine in exchange for the continuous help of the United States with the Russian invasion, as well as the possibility of retaking the control of the Panama Canal, which is currently property and is controlled by the country of Panama.
Trump specifically dismissed the idea of tariffs on the United Kingdom, stating that it is likely that the two countries can reach an agreement, which caused a rebound in relief in the sterling pound that led the bearish fall of Monday to be flat.
The Bank of England (BOE) is expected to cut interest rates at the end of this week. However, things could change quickly if it seems that tariffs will become a continuous global inflationary problem.
GBP/USD price forecast
The GBP/USD continues to move in an intermediate technical posture, stuck in the price action near the 1,2400 area. However, continuous tests at the lower end and a general increase in volatility this week will probably keep the defensive sterling pound while the cable continues to move away from the 50 -day exponential mobile average (EMA) about 1,2500.
GBP/USD daily graphics
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.
