- The GBP/USD gains strength about 1,2940 in the first bars of the European session on Monday, rising 0.16% in the day.
- The next round of Trump tariffs is scheduled for April 2, when the White House will announce reciprocal levies over many countries.
- Bailey del Boe said that those responsible for politics still believed that the rates were on a path of gradual descent.
The GBP/USD torque attracts some buyers around 1,2940 during the first part of the European session on Monday, driven by a weaker dollar. The uncertainty about the next round of tariffs of US President Donald Trump and concerns about the US economic deceleration weigh on the US dollar (USD) compared to the sterling pound (GBP). The preliminary reading of the Purchasing Management Index (PMI) of the US S&P manufacturing for March will be the center of attention later on Monday.
The dollar remains under pressure since analysts believe that Trump’s aggressive and erratic commercial policies could trigger a recession. Trump has declared on April 2 as the “Day of Liberation” for the US, when it will implement the so -called reciprocal tariffs that seek to match US tariffs with those charged by commercial partners, as well as tariffs in sectors such as cars, pharmaceutical products and semiconductors, which has repeatedly claimed that they will promulgate that day.
The Bank of England (BOE) maintained interest rates without changes on Thursday, maintaining the reference rate by 4.5%. The decision had been widely anticipated by the markets. The governor of BOE, Andrew Bailey, said there is a lot of uncertainty at this time, but said that those responsible for politics still believed that the rates were “on a path of gradual descent.” Looking forward, we are still waiting for 100 basic points of BOE cuts for a terminal rate of 3.5% for the beginning of 2026, “said Nomura Bank analysts, George Buckley and Andrzej Szczepaniak.
However, the gloomy economic situation of the United Kingdom, together with the growing global political uncertainty and weak confidence, could undermine the GBP. The economy of the United Kingdom remains in “waiting mode” while waiting for the next budget of Foreign Minister Rachel Reeves and faces the growing risks of US commercial policies. Investors will closely follow the inflation data of the Consumer Price Index (CPI) of the United Kingdom for February in search of a new impulse, which will be published later on Wednesday.
LIBRA ESTERLINA FAQS
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.
