- The GBP/USD attracts some buyers around 1,3350 in the first part of Monday’s Asian session.
- The United Kingdom hopes to reach an agreement with Trump after it imposed 10% tariffs on most of the imports of British goods to the US.
- The president of the Fed, Powell, said that the US Central Bank remains in waiting and observation mode.
The GBP/USD pair extends its rise to about 1,3350 during the first Asian session on Monday. The increase in the main torque is backed by a weaker American dollar (USD) in general, since operators feel increasingly confident that the economic policies of US President Donald Trump will take the economy to a recession.
The Prime Minister of the United Kingdom, Keir Starmer, and the president of the United States, Donald Trump, discussed on the “current and productive” commercial negotiations “on his first call since Trump imposed tariffs on the assets of the United Kingdom. According to a Downing Street official, Starmer emphasized his commitment to “free and open trade and the importance of protecting national interest.”
Starmer seeks to reach an agreement with the US after Trump announced 10% tariffs on the assets of the United Kingdom and a 25% rate to imports of cars, steel and aluminum. Meanwhile, optimism around commercial negotiations between the US and the United Kingdom continues to support the GBP against the dollar in the short term.
However, the hard line statements of the US Federal Reserve (Fed) could raise the USD and limit the rise of the main torque. The president of the Fed, Jerome Powell, said last week that the increase in tariffs could feed inflation while undermining growth, complicating the way for decisions about interest rates. Powell said: “At the moment, we are well positioned to expect greater clarity before considering any adjustment to our policy position.”
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.
