- The GBP/USD rallied on Tuesday, strengthened by the titles of an incoming US-UK trade agreement.
- Specific details remain limited, but GBP markets have been strengthened by hope to avoid tariffs on us.
- Pound Sterling arranged 0.4% higher against greenback after testing at 1.3400.
The GBP/USD rose on Tuesday, climbing four tenths of a percentage of the day and a 1.3400 test to hold the titles of a possible US-UK trade deal that would see the UK avoid avoiding trading tariffs actively pursued by the Trump administration.
The upcoming Federal Reserve (FED) rate call because Wednesday is still hanging on markets as the main market event of the week. Despite markets that widely expected another handling of Fed rates, investors will look at policy comments, specifically feeding Jerome Powell's statement, for any signs that the Fed can pivoting towards a rate cutting cycle than the latter.
Fed, Boe Double Header since this week
The Fed has been subjected to many fronts to drop interest rates recently: market participants are always in hunting for cheaper financing options, and the Trump administration is incredible voice and confessing that the Fed's work should be lower interest rates to make our debt transfer cheaper. It runs over the opposite of the Fed's dual mandates of supporting the entire work and maintaining price volatility in check, however the main aspects of Fed's mandate are largely lost to US president Donald Trump.
The Bank of England (BOE) will follow Wednesday's Wednesday action with its own call rate on Thursday. Unlike Fed, Boe is widely expected to deliver another quarter-point rate trim, with the Boe's Monetary Policy Committee (MPC) that is expected to vote nine-to-one favor of delivery of the fourth cut rate since August last year.
GBP/USD Price Forecasting
Despite a stable bullish performance on Tuesday, the GBP/USD remains members of a close-term integration baked between 1.3450 and 1.3250. Price action is leaning against the midrange, with technical oscillators showing momentum more drained in cable markets.
The GBP/USD is still well supported above the 200-day exponential transfer of average (EMA) near 1.2830, however the additional TopSide momentum will take a strong display from the bidders who remained trapped under 1.3400 handle for the time being.
GBP/USD -day -day
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.
