- The GBP/USD is backed by the “Restart” agreement between the United Kingdom and the EU and Huw Pill del BOE rejecting the rapid rate reduction.
- The market sees the BOE keeping rates in June; 41 basic relief points are incorporated by the end of the year.
- The US Fiscal Law generates debt fears; The DXY falls after the moody’s reduction, but the treasure yields remain firm by the caution of the Fed.
The sterling pound recorded modest profits against the US dollar on Tuesday, limited by the increase in the yields of the US Treasury bonds as the news of a commercial agreement between the United Kingdom and the EU improves the perspectives of the British currency. However, the aggressive position of the Federal Reserve prevented the GBP/USD from reaching 1,3400, and was quoted at 1,3371 at the time of writing.
The GBP/USD remains firm while the optimistic news of the United Kingdom finds resistance due to the increase in US yields and the cautious tone of the Fed
The news that the United Kingdom and the Eurozone (EU) reached an agreement to “restart” relations after Brexit supported the cable. In addition, the chief economist of the Bank of England (BOE), Huw Pill, was aggressive, stating that “the dissident vote comes from a concern that the rhythm of withdrawal of monetary policy restrictions since last summer – quarterly cuts of 25 basic points – is too fast, given the balance of risks for price stability.”
Market actors expect the BOE to keep the rates at 4.25% at the June meeting, although they had incorporated 41 basic points (PBS) of relief towards the end of the year.
On the other side of the Atlantic, the US Congress continues to discuss the approval of Trump’s tax bill, which has so far exceeded the Chamber Budget Committee. According to Reuters, “non -partisan analysts say that the bill would add between 3 billion and 5 billion dollars to the national debt of 36.2 billion dollars in the next decade.”
Meanwhile, the dollar continued to recover after the reduction of Moody’s to the debt qualification of the US government of AAA to AA1, citing concerns about the reduction of the budget deficit.
The American dollar index (DXY), which tracks the value of the dollar against a basket of six currencies, is 0.16% below 100.22.
Meanwhile, the eyes of the operators are put in the publication of the United Kingdom inflation data on Wednesday. Later, it is expected that the president of the Fed of St. Louis, Alberto Musalem, and the governor of the Fed, Adriana Kugler, to hold holders.
GBP/USD price forecast: technical perspective
The GBP/USD paused its upward trend despite staying in positive territory, as indicated by the relative force index (RSI). The RSI favors buyers, but must exceed the level of 1,3400 before challenging the peak of the year to date (YTD) of 1,3443, which is followed by a target of 1,3500.
On the contrary, if the GBP/USD falls below 1,3350, the first support would be 1,3300. Once surpassed, the next stop is 1,3250, 1,3200 and the single mobile (SMA) of 50 days in 1,3122.
LIBRA ESTERLINA PRICE THIS WEEK
The lower table shows the percentage of sterling pound (GBP) compared to the main currencies this week. Libra sterling was the strongest currency against the Australian dollar.
| USD | EUR | GBP | JPY | CAD | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.66% | -0.62% | -0.46% | -0.16% | 0.07% | -0.38% | -0.66% | |
| EUR | 0.66% | 0.02% | 0.24% | 0.56% | 0.86% | 0.34% | 0.00% | |
| GBP | 0.62% | -0.02% | -0.08% | 0.56% | 0.84% | 0.32% | -0.01% | |
| JPY | 0.46% | -0.24% | 0.08% | 0.31% | 0.71% | 0.29% | -0.13% | |
| CAD | 0.16% | -0.56% | -0.56% | -0.31% | 0.25% | -0.24% | -0.53% | |
| Aud | -0.07% | -0.86% | -0.84% | -0.71% | -0.25% | -0.52% | -0.84% | |
| NZD | 0.38% | -0.34% | -0.32% | -0.29% | 0.24% | 0.52% | -0.33% | |
| CHF | 0.66% | -0.01% | 0.01% | 0.13% | 0.53% | 0.84% | 0.33% |
The heat map shows the percentage changes of the main currencies. The base currency is selected from the left column, while the contribution currency is selected in the upper row. For example, if you choose the sterling pound from the left column and move along the horizontal line to the US dollar, the percentage change shown in the box will represent the GBP (base)/USD (quotation).
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.
