- The EUR/GBP maintains losses around 0.8665 in the first bars of the European session on Thursday.
- The unemployment rate of the United Kingdom rose to 4.7% in the three months until May; The change in the number of applicants was 25.9K in June.
- Trump said an agreement with Europe could be reached.
The EUR/GBP cross operates in negative territory around 0.8665 during the first bars of the European session on Thursday. The sterling pound (GBP) remains weak in front of the euro (EUR) after the United Kingdom employment data. The operators will be attentive to the inflation data of the Harmonized Index of Consumer Price (IAPC) of the Eurozone, which will be published on Thursday.
The data published by the United Kingdom National Statistics Office on Tuesday showed that the country’s ILO unemployment rate rose to 4.7% in the three months to May compared to the previous 4.5%. This figure was below the expectations of 4.6% during the informed period.
Meanwhile, the change in the number of applicants increased by 25.9K in June compared to 33.1k previous, above the 17.9K consensus. The GBP maintains losses in an immediate reaction to the United Kingdom Employment Report.
The US president, Donald Trump, said on Wednesday night that his administration was very close to a commercial agreement with India and that an agreement with Europe could be reached. The operators will closely follow the developments around the commercial agreement between the US and the EU. An increase in US tariffs on the imports of the EU would further weaken eurozone growth and probably lead to the European Central Bank (ECB) to reduce indebted costs. This, in turn, could drag the shared currency in the short term down.
LIBRA ESTERLINA – FREQUENTLY QUESTIONS
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.
