- The GBP/USD fell even more on Monday, heading around 1,3400.
- The sterling pound has lost more than 2.5% since the maximum of July 1,3788.
- The key inflation metrics for both the US and for the United Kingdom are still coming.
The GBP/USD sank even more on Monday, closing downwards per seventh consecutive market session and falling below the exponential mobile average (EMA) for the first time since mid -April. The markets expect the last round of tariff threats by US President Donald Trump to end another delay or a suspension, but the negative economic data of the United Kingdom, as well as a general level of restlessness for investors, are keeping the appetite at the appetite for the risk and strengthening the sure refuge that the US dollar represents.
A new deadline for a wide range of tariffs has been arbitrarily set for August 1, after another delay of Trump’s “indefinite” reciprocal tariffs that were announced in April. In addition to the reciprocal tariffs of the “Liberation Day” of the Trump administration, now Trump is threatening with two -digit tariff increases about some of the closest commercial partners in the US, including South Korea, Japan, Canada and Mexico.
As of Tuesday, the last round of US inflation data is on the agenda. The inflation data of the US Consumer Price Index (CPI) is expected to accelerate the first batch of tariffs that Trump successfully starts to take effect in the US economy and filter the general data sets in the coming months. The United Kingdom will continue with its own inflation data round of the general CPI early on Wednesday. The IPC inflation of the United Kingdom is expected to remain stable in previous figures in June.
GBP/USD price forecast
The continuous decrease in cable offers has pushed sterling to new minimum of two weeks. The pair is testing below the EMA of 50 for the first time in almost three months while the cable goes back from the maximum of several years reached as recently as in early July.
GBP/USD daily graphics
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.
