- Pounds Sterling faces slightly sale of pressure because Boe is widely expected to cut interest rates in May.
- Boe's Greene hopes that Trump's tariff policy is disinflationary for the UK economy.
- Washington said China should be the one to start bilateral trade talks.
The edges of Pound Sterling (GBP) are lower against major peers this Tuesday during the European session. The British money drops as traders are increasingly confident that the Bank of England (BOE) will reduce interest rates at the May policy meeting. The reasons behind this BOE's accelerated forecasts are to avoid the expectations of the United Kingdom (UK) inflation and increase global economic intensification.
Officials from central banks around the world have signed that the impact of the protectionist policies imposed by Washington will be net disinflationary for their economies, thinking domestic companies – and especially Chinese companies – will be forced to sell their products to other markets at lower rates in front of higher US markets.
On Friday, Boe Policymaker Megan Greene also indicated that the potential trade war would be a “net disinflationary” for the economy in a discussion with the Atlantic Council Think Tank. Greene also expressed concerns over “weak productivity” and “labor market risks” due to increasing employers' contributions to social security schemes.
Daily Digest Market Movers: Pound Sterling Retraces Against US Dollar
- Pound Sterling corrected marginally to close to 1.3400 against the US dollar (USD) during European trading time Tuesday from fresh three-year-old 1.3445 posted earlier in the day. The GBP/USD pair returns while the US dollar steadies, along with investors awaiting a murder of United States (US) economic data data.
- The US Dollar Index (DXY), which monitors the value of the greenback against six major currencies, trading within Monday of the range around 99.20.
- This week, investors will pay attention to market -related market -related, ISM Purchasing Manager's Index (PMI), personal price consumption (PCE), and Q1 Gross Domestic Product (GDP) consumption to obtain clues about the Federal (FED) policy perspective (FED).
- The main highlight of the Sunday is expected that the PMI's ISM manufacturing data, which will indicate the impact of tariff policy announced by US president Donald Trump on the cost of input and how much the factory owns are willing to pass to consumers.
- Signs of increasing sales prices of factory -owned will accelerate the expectations of consumer inflation. Such a scenario would be a limiting factor for the Federal Reserve (FED) in reducing interest rates.
- During the Tuesday session, investors will focus on US Jolts' job opening data for March, which will be published at 14:00 GMT. Work opening data is expected to show that employers posted 7.5 million jobs, less than less than 7.56 million seen in February.
- Meanwhile, increased uncertainty in trade relations between the US and China will keep the greenback on the back foot. A fresh strengthening of the US-China trade uncertainty came from US Treasury Secretary Scott Bescent, who put responsibility for any development in the bilateral trade in Beijing. “I believe it is up to China to escalate, because they sell us five times than we sell them,” Bescent said in an interview in the CNBC squawk box on Monday.
Technical Analysis: Pound Sterling will remain above all the short-term emma
The pounds sterling retrace slightly up to 1.3400 against the US dollar from the three -year -old 1.3445. The overall perspective of the pair remains bullish because all the short to the long exponential transition of averages (EMA) is higher slipping.
The 14-day relative Index index (RSI) rebound after cooling up to 60.00, indicating the resurgence of the reversal trend.
Upside down, the level of 1.3600 will be a major drawback for the pair. Looking below, the high April 3 around 1.3200 will act as a major support area.
Pound sterling faqs
Pound Sterling (GBP) is the world's oldest currency (886 AD) and the official currency of the United Kingdom. This is the fourth most traded unit for foreign exchange (FX) in the world, which provides 12% of all transactions, reaching $ 630 billion a day, according to 2022 data. Its main trading pairs are the GBP/USD, also known as 'cable', which costs 11%of FX, GBP/JPY, or the 'Dragon' because it is known by entrepreneurs (3%), and EUR/GBP (2%). Pound Sterling is issued by the Bank of England (BOE).
The one most important factor that influences the value of pound sterling is the financial policy conceded by the Bank of England. BOE is based on its decisions if it achieves the main purpose of “price stability” – a stable inflation rate of almost 2%. Its main tool for achieving it is to adjust interest rates. When inflation is too high, the BOE will try to regenerate it by increasing interest rates, making it more expensive for people and businesses to access credit. It is generally positive for GBP, as the higher interest rates make the UK more attractive -the UK is a place for global investors to park their money. When inflation drops too low it is a sign of economic growth is slow. In this situation, the BOE will consider lowering interest rates to erase credit so that businesses will borrow more to invest in growth projects.
The data releases a measure of economic health and may affect the amount of pound sterling. Indicators such as GDP, manufacturing and services PMIS, and work can be influenced by all GBP direction. A strong economy is good for sterling. Not only does it attract more foreign investments but it can encourage Boe to put interest rates, which directly strengthens GBP. Otherwise, if economic data is weak, pound sterling is likely to fall.
Another significant release of data for pound sterling is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports at a given period. If a country produces highly sought out exports, its money will benefit from excessive demand created from foreign consumers who seek to buy these goods. Therefore, a positive balance on the net trade strengthens a money and vice versa for a negative balance.
