- The GBP/USD found a slight rebound to overcome 1,3450 on Thursday.
- Despite the strength of the dollar in the short term due to geopolitical concerns, the markets took a break during the US holiday session in the middle of the week.
- Tensions between Israel and Iran continue to increase, and the Trump administration is delaying a decision about getting directly involved.
The GBP/USD found some space on the high side on Thursday, rising above the level of 1,3450 after capturing an early technical rebound from the 1,3400 area. Market flows in general have favored the US dollar recently, since tensions in the Middle East continue to increase, but US markets were inactive by a national holiday on Thursday, giving the cable some space to breathe and relieve the purchase pressure over the USD.
According to a CBS reporter who published on the social media platform X (previously Twitter), President Donald Trump could be considering an order for US military assets to aim at an Iranian nuclear production installation. If the Trump administration decides to move forward with the reported proposal, it will be the first time that the US displays military assets preventively from the invasion of Iraq in 2003. Citing an official of the Israeli government, The Times of Israel reported that the Israeli government awaits a final decision of the Trump administration within the next 24 to 48 hours.
Reports that cite three different diplomats have confirmed that personnel within the US administration, specifically the special envoy of the US for the Middle East, Steve Witkoff, has been in regular contact with their Iranian counterpart, helping to mitigate part of the emotional reaction that affects operators outside the market on Thursday. Iranian Foreign Minister Abbas Araghchi allegedly told Witkoff envoy that the Iranian government is willing to be ‘flexible’ in its nuclear plans and resume conversations, but only if Israel ceases its long -range missile attacks. Iranian Foreign Minister, Araghchi, declared that he will travel to Geneva on Friday to meet his European counterparts as well.
Retail sales figures from the United Kingdom will be published on Friday, but it is unlikely that there is a significant movement in the market from these figures. Investors generally anticipate a contraction in retail sales data in monthly terms, forecasting a figure of -0.5% compared to the increase of 1.2% in April.
GBP/USD price forecast
Thursday’s dollar volumes gave a boost to GBP/USD, pushing a technical rebound from the level of 1,3400. The pair continues to quote on the north side of the Exponential Mobile (EMA) average of 50 days about 1,3355, and the long -term bundle impulse still has a technical floor set from an ascending line of trend through the same area.
GBP/USD daily graphics
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.
