The GBP/USD advances slightly above 1,3350 while Trump’s attacks to Powell threaten the independence of the Fed

  • The GBP/USD remains strong about 1,3370 in the first measures of the Asian session on Tuesday.
  • Trump criticizes the Powell of the Fed for not cutting interest rates.
  • Softer inflation data in the United Kingdom and global uncertainty have raised the way for BOE features.

The GBP/USD pair operates in positive territory around 1,3370 during the Asian session on Tuesday. The fears of a slowdown in the United States (USA) and concerns about the independence of the Federal Reserve (FED) drag the US dollar (USD) down and create a tail wind for the major torque.

The president of the USA, Donald Trump, criticized the Powell of the Fed for continuing to support a way of “waiting and seeing” in monetary policy until there is greater clarity on how the new tariff policy will shape the economic perspectives. Trump warned in a social truth publication that the US economy would slower unless Powell reduced interest rates immediately.

Meanwhile, the US dollar index (DXY), an index of the USD value measured against a basket of six world coins, currently quotes about 98.30, the lowest level since March 2022. The growing uncertainty about Trump’s tariffs and the increase in commercial tensions between the US and China undermine the USD in general.

On the other hand, the inflation data of the Consumer Price Index (CPI) of March in the softer United Kingdom and the global uncertainty have raised the way for a cut of interest rates by the Bank of England (BOE) at the May policy meeting. Financial markets now bet on a rate cut at the BOE meeting in May, estimating a possibility of 86%, according to LSE data. This, in turn, could weigh on the sterling pound (GBP) against the dollar.

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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