- The GBP / USD is weakening while cautious feeling prevails before the release of the United States manufacturing PMI.
- Trump stimulates market optimism with remarks on an American-Chinese trade agreement, declaring that there is a “very good probability” of an agreement.
- The Sterling book remains under pressure in the middle of increasing expectations of the future political position of the Bank of England.
The GBP / USD pair continues to decrease its downward trajectory for the third consecutive day, exchanging approximately 1,3310 during the Asian session on Thursday. Market players seem to be positioned with caution before the manufacturing managers index of the American Institute (ISM) of the management of the United States (PMI), which will be published later in the North American session.
The US dollar (USD) is gaining strength, supported by the comments of US President Donald Trump in an interview at the Town Hall of the newspaper early on Thursday. Trump expressed his optimism as to a possible trade agreement with China, declaring that there is “a very good probability that we will conclude an agreement”. He stressed that any agreement should align with American interests and also referred to future potential agreements with India, South Korea and Japan. In addition, Trump announced that a trade agreement with Ukraine had been finalized earlier during the day.
The USD Dollar index, which follows the USD performance against a basket of six large currencies, also climbs for the third consecutive day, negotiating nearly 99.70 at the time of the editorial staff. The greenback random comes as traders reduce the expectations of 100 basic points reduced by the Federal Reserve (Fed) this year, following recent economic data which pointed out a weakness of the American economy.
The US gross domestic product (GDP) contracted 0.3% annualized in the first quarter of 2025, missing forecasts of 0.4% growth and strongly decreasing compared to the expansion of 2.4% in the previous quarter. Meanwhile, the basic personal consumption (PCE) price index – a key – pink inflation gauge of 2.6% in annual sliding in March, in accordance with expectations but slower than the 2.8% increase in February.
Through the pond, the pound sterling (GBP) remains under pressure while the feeling of the market turns more and more towards the Bank of England (BOE). Merchants are now prices in a drop in the rate of 25 base points at the next BOE political meeting on May 8. Expectations for relaxation have intensified in a context of fears that the newly announced United States pricing policy could reduce global inflationary pressures and alleviate economic growth in the United Kingdom (United Kingdom).
On Friday, Boe's policy decision -maker, speaking to the Atlantic Council, said the potential trade conflict would have a “net disinflation” impact on the British economy. Greene also highlighted risks on the job market, highlighting the recent increase in national employers' insurance contributions from 13.8% to 15%, which came into force this month.
Pound Sterling Faqs
The pound sterling (GBP) is the oldest currency in the world (886 after JC) and the official currency of the United Kingdom. This is the fourth most negotiated unit for currencies (FX) in the world, representing 12% of all transactions, with an average of $ 630 billion per day, according to 2022 data. Its key trading pairs are GBP / USD, also known as “cable”, which represents 11%of FX, GBP / JPY or “Dragon” as it is known by merchants (3%) and EUR / GBP (2%). The Sterling book is issued by the Bank of England (BOE).
The most important factor influencing the value of the pound sterling is the monetary policy decided by the Bank of England. The BOE bases its decisions on the question of whether it has achieved its main objective of “price stability” – a constant inflation rate of approximately 2%. Its main tool for achieving it is the adjustment of interest rates. When inflation is too high, the BO will try to curb it by increasing interest rates, which makes people more expensive for people and businesses to access credit. This is generally positive for GBP, because higher interest rates make the United Kingdom a more attractive place for global investors to park their money. When inflation falls too low, it is a sign that economic growth slows down. In this scenario, the BOE will plan to reduce interest rates to object to the credit so that companies will borrow more to invest in growth generating projects.
Data versions assess the health of the economy and can have an impact on the value of the pound sterling. Indicators such as GDP, Manufacturing and Services PMI and employment can all influence the management of the GBP. A strong economy is good for the pound sterling. Not only does it attract more foreign investment, but it can encourage BOE to establish interest rates, which will directly strengthen GBP. Otherwise, if the economic data is low, the pound sterling is likely to decrease.
Another important version of data for the Sterling book is the trade balance. This indicator measures the difference between what a country gains from its exports and what it spends in imports over a given period. If a country produces highly sought -after exports, its currency will only benefit from the additional demand created from foreign buyers seeking to buy these goods. Consequently, a positive net trade balance reinforces a currency and vice versa for a negative balance.
