- The sterling pound faces a slight sales pressure since it is widely expected that the BOE cuts interest rates in May.
- Greene of the BOE hopes that Trump’s tariff policy will be deflationary for the United Kingdom economy.
- Washington says that China should be the one that starts bilateral commercial conversations.
The sterling pound (GBP) goes back slightly in front of its main peers on Tuesday in the European session. The British currency lows as the operators become increasingly confident that the Bank of England (BOE) will reduce interest rates at the May policy meeting. The reasons behind these moderate bets of the BOE are the expectations of inflation in the United Kingdom (UK) that are decreasing and the growing global economic tensions.
The officials of the central banks around the world have indicated that the impact of the protectionist policies imposed by Washington will be clearly deflationary for their economies, assuming that national companies – and particularly Chinese companies – will be forced to sell their products in other markets at lower prices before the highest tariffs of the US.
On Friday, the BOE policy head, Megan Greene, also indicated that the possible commercial war will be “clearly deflationary” for the economy in a discussion with the group of experts Atlantic Council. Greene also expressed concerns about “low productivity” and “risks to the labor market” due to an increase in employers’ contributions to social security schemes.
What moves the market today: the sterling pound goes back against the US dollar
- The sterling pound marginally corrects about 1,3400 against the US dollar (USD) during the European negotiation hours on Tuesday from its new three years of 1,3445 registered earlier in the day. The GBP/USD pair goes back as the US dollar stabilizes, with investors waiting for a series of US economic data publications (USA).
- The American dollar index (DXY), which tracks the value of the dollar against six main currencies, is negotiated within the range of Monday around 99.20.
- This week, investors will pay special attention to the data related to the labor market, the Purchase Management Index (PMI) of the ISM, the Personal Consumer Expenses Price Index (PCE) and the data of the Gross Domestic Product (GDP) of the first quarter to obtain clues about the monetary policy perspective of the Federal Reserve (FED).
- The main prominent point of the week is expected to be the data of the ISM manufacturing PMI, which will indicate the impact of the tariff policy announced by the US president, Donald Trump, on the cost of inputs and how much they are willing to transfer the owners of factories to consumers.
- The signals for increasing sales prices by factor owners would accelerate consumer inflation expectations. Such scenario would be a limiting factor for the Federal Reserve (FED) in the reduction of interest rates.
- In Tuesday’s session, investors will focus on US Jolts job offers data for March, which will be published at 14:00 GMT. Employment offers are expected to show that employers published 7.5 million jobs, slightly below 7.56 million seen in February.
- Meanwhile, the greatest uncertainty about commercial relations between the US and China will keep the US dollar in an unfavorable position. A new impulse to commercial uncertainty between the US and China came from the US Secretary of the US Treasury, Scott Besent, who has put responsibility for any progress in bilateral trade over Beijing. “I think it depends on China Descalar, because they sell us five times more than we sell them,” Besent said in an interview in CNBC box box on Monday.
Technical analysis: The sterling pound is maintained above all the short -term short -term EMAS
The sterling pound slightly goes back to about 1,3400 against the US dollar from the maximum of three years of 1,3445. The general perspective of the torque remains bullish since all exponential mobile socks (EMAS) in the short term are inclined to rise.
The 14 -day relative force (RSI) index bounces after cooling at 60.00, indicating a resurgence in the upward trend.
Upwards, the round level of 1,3600 will be a key obstacle to the torque. Looking down, the maximum of April 3 around 1,3200 will act as an important support area.
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.
