- The GBP/USD weakens around 1,3280 in the first Asian session on Wednesday.
- The markets react positively to Trump’s de -escalation, supporting the US dollar.
- The US will seek that the United Kingdom reduces its automotive tariff, said the WSJ.
The GBP/USD pair remains weak about 1,3280 during the first Asian session on Wednesday. The comments of the US Treasury Secretary, Scott Besent, suggest a thaw in commercial tensions between the US and China, feeding optimism in the markets and strengthening the US dollar (USD) compared to the sterling pound (GBP).
Scott Besent said Tuesday that he is waiting for a decala in the commercial war of US President Donald Trump with China in the very close future. In addition, he affirmed that tariff staging with China cannot be sustained by both parties and that the two largest economies in the world will have to find ways of descaling.
In addition, Trump on Tuesday seemed to withdraw the threats to fire the president of the Federal Reserve (Fed), Jerome Powell, after days of criticism intensified to the president for not cutting the interest rates. The optimism and the de -escalation of the commercial war provide some support for the dollar.
The operators will closely follow the developments around commercial conversations between the US and the United Kingdom. The Wall Street Journal reported Tuesday that the Trump administration is preparing its terms for commercial conversations with the United Kingdom, looking for London to reduce tariffs and other non -tariff barriers on a wide range of American products.
The US will seek that the United Kingdom reduces its automotive tariff from 10% to 2.5%, according to people with knowledge of a preliminary document that the Trump administration circulated between the interested parties this week, delineating the objectives for commercial negotiation with the United Kingdom. However, any sign of uncertainty in commercial policy could undermine the US and create a tail wind for the main torque.
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.
