- The GBP/JPY remains under a strong sales pressure and listed below 196.00 on Wednesday.
- The sale of bonds from the United Kingdom weighs on the pound sterling.
- British Prime Minister Keir Starmer refused to confirm that Finance Minister Rachel Reeves will remain in her position.
The sterling pound is maintained under strong sales pressure on Wednesday while the markets evaluate the latest political developments in the United Kingdom. At the time of publication, the GBP/JPY quoted at its lowest level in two weeks about 195.50, losing 0.8% in the day.
The British finance minister Rachel Reeves seemed visibly annoying during the questions to the prime minister on Wednesday after Prime Minister Keir Starmer refused to ensure that she would remain in her position until the next elections. This development caused a massive sale of bonds of the United Kingdom government, with the performance of the reference bonus to 10 years rising more than 4% in the day to its highest level since June.
Although Starmer’s press secretary later said that Reeves has the full support of the Prime Minister, the markets largely ignored this comment. “The chancellor is not going anywhere, she has the total support of the prime minister,” the press secretary told journalists.
Reflecting the generalized weakness of the Libra, the EUR/GBP was last seen up almost 1% in the day above 0.8650, while the GBP/USD fell more than 1% about 1,3600.
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.
