- The GBP/USD earns land about 1,3580 during Thursday’s Asian session.
- The operators see that the Fed will cut its indebtedness costs for September.
- The monthly GDP data of the United Kingdom and the US IPP will be the center of attention later on Thursday.
The GBP/USD pair extends its rise about 1,3580 during the Asian negotiation hours on Thursday. The inflation data in the most expected US weigh on the US dollar (USD) compared to the sterling pound (GBP). The Gross Domestic Product (GDP) of the United Kingdom for April and the US Price Price Index (IPP) Report of the US will be at the Care Center later on Thursday.
The operators increase their bets that the US Federal Reserve (FED) will make a rate cut for September. Some analysts expect the Fed to perform more than one interest rate cut this year. This, in turn, exerts some selling pressure on the main torque.
After the IPC report, the operators have discounted 47 basic points (PBS) of FED flexibility by the end of the year, compared to approximately 42 pbs before the CPI data, according to Bloomberg. While the next movement of the Fed is totally discounted for October, operators increased the expectations of a cut in September to around 75% probability.
On the other hand, the weakest employment data in the United Kingdom increased market expectations that the Bank of England (BOE) will cut interest rates more than investors had previously projected. This could limit cable rise in the short term. However, operators will take more clues from the monthly GDP data of the United Kingdom on Thursday, which is expected to contract 0.1% after expanding 0.2% in March. In case of a surprise upwards in the United Kingdom GDP figure, this could support the GBP.
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.
