GBP/USD wins traction above 1,3250 against new commercial uncertainty

  • The GBP/USD gains ground to around 1,3270 in the first bars of the Asian session on Thursday.
  • The new commercial uncertainty triggered by Trump continues to weigh on the US dollar.
  • Operators increase their expectations about the BOE rates cut in May.

The GBP/USD torque gains strength about 1,3270, interrupting the two -day loss streak during the first bars of the Asian session on Thursday. The US dollar (USD) weakens in front of the pound due to uncertainty about Trump’s commercial policies.

The administration of US President Donald Trump declared that he has spoken with 90 countries about tariffs already. The United States will establish tariffs for China in the next two to three weeks, and depends on China how soon tariffs can be reduced.

In addition, Trump said Wednesday that a 25% tariff imposed on cars imported from Canada to the US could increase, since Trump is promoting his interest in strengthening US automotive production and reducing the dependence of vehicles made abroad. The uncertainty about Trump’s tariffs tarnishes economic perspectives and feeling, which weighs on the US dollar.

On the other hand, the growing expectations of feat cuts from the Bank of England at the May meeting could undermine the short -term sterling pound (GBP). Financial markets have discounted almost 82% probabilities of a BOE rates cut next month, since the effects of the evolutionary commercial war of Donald Trump continue to develop in the global economy, according to LSE data.

Weekly applications for unemployment subsidy in the US will be published later on Thursday, together with the National Activity Index of the Chicago Fed, the requests for lasting goods and the sales of existing housing. On Friday, retail sales data from the United Kingdom will be in the center of attention, which is expected to decrease 0.4% intermensual after an increase of 1.0% in February.

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

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