- The sterling pound is under pressure against its main peers after the publication of an IPC of the weak United Kingdom in March.
- Weak inflation in the United Kingdom and the gloomy work panorama pave the way for the BOE to cut interest rates in May.
- Investors are looking for new developments in the agreements between the US and their commercial partners.
The sterling pound (GBP) faces sales pressure compared to its main peers on Wednesday, except against the US dollar (USD), after the publication of the data of the consumption price index (CPI) of the United Kingdom for March, which were softer than expected.
The National Statistics Office (ONS) reported that the general CPI grew at a moderate rate of 2.6% year -on -year compared to estimates of 2.7% and February reading of 2.8%. In the same period, the underlying IPC – which excludes volatile elements such as food, energy, alcohol and tobacco – increased 3.4%, as expected, slower than the previous reading of 3.5%. Intermensual general inflation grew 0.3%, softer than estimates and the previous publication of 0.4%.
Inflation in the services sector, which is closely followed by the officials of the Bank of England (BOE), slowed to 4.7% year -on -year since the previous publication of 5%. Inflationary pressures in the United Kingdom are expected to cool, which will increase market expectations that the BOE will cut interest rates in the May monetary policy meeting.
In addition, the gloomy panorama of the labor market in the United Kingdom, with an increase in employers’ contributions to social security schemes that enter into force this month, would also force those responsible for the BOE policy to support a relief of monetary policy. In the autumn budget, the Foreign Minister of the United Kingdom, Rache Reeves, increased the contribution of employers to the National Insurance (NI) from 13.8% to 15%.
What moves the market today: sterling pound exceeds the US dollar
- The Esterlina Libra advances about 1,3290 against the US dollar during European negotiation hours on Wednesday. The GBP/USD torque continues to show strong yield while the US dollar (USD) works below the expected on all fronts, with investors increasingly confident that the economic policies of the president of the United States, Donald Trump, will take the economy to a recession. The American dollar index (DXY), which follows the value of the dollar against six main currencies, falls to about 99.50 after an ephemeral recovery movement at 100.00 on Tuesday.
- Although the US president Trump has declared a 90 -day break in the execution of reciprocal tariffs for all his commercial partners, except China, which announced on the so -called “day of liberation”, investors believe that the commercial war with the Asian giant is sufficient to cause shock waves in the economy.
- The US economy cannot immediately compensate for the demand for Chinese imports, given the insufficiency of manufacturing facilities and the absence of a low -cost competitive advantage. Such scenario will force US importers to increase the prices of Chinese goods substitutes, which will significantly affect the purchasing power of households. Theoretically, less purchasing power leads to a decrease in the general demand that slows the economic growth of an economy to a large extent, whose two thirds of the growth of the gross domestic product (GDP) depend on consumer spending.
- Meanwhile, investors expect White House ads about achieving agreements with their business partners. On Tuesday, the US press secretary, Karoline Leavitt, said the Trump administration is discussing trade agreements with “more than 15 nations” and that some agreements could be announced “very soon.”
- On a commercial agreement with the United Kingdom, the US vice president, JD Vance, was confident in reaching a commercial agreement with Great Britain while talking to Unherd on Tuesday. Vance said there is a “good possibility” that both nations get a commercial agreement due to the affinity of the president for Great Britain.
Technical analysis: The sterling pound extends its winning streak against the US dollar
The sterling pound extends its winning streak for the seventh day of negotiation and jumps to about 1,3300 against the US dollar on Wednesday. The short -term perspective of the torque is optimistic since all long -term exponential mobile socks (EMA) are inclined up to rise.
The relative force index (RSI) of 14 days has shown a V -form recovery from 40.00 to 68.00, suggesting a strong bullish impulse.
Looking down, the psychological support of 1.3000 will act as a key support zone for the torque. On the positive side, the maximum of three years of 1,3430 will act as a key resistance zone.
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.
