- The GBP/USD shot over 1,3500 on Monday while investors are preparing for the weekend missile attacks.
- A tentative ceasefire could validate market bets on a deceleration.
- The double heading appearances of the heads of the central banks are scheduled for Tuesday.
The GBP/USD won the ground on Monday, going up after the US decision to get directly involved in the spiral conflict between Israel and Iran that began recently. The Trump administration, avoiding the authority of the Congress, ordered a series of attacks on Iranian nuclear facilities during the weekend, which caused an increase in raw oil markets. After Iran’s retaliation attacks early on Monday against the US Air Force facilities in Qatar, all parties have tentatively agreed on fire, and the conversations between Iran and Israel are expected to begin.
The tumultuous evolution of conflicts in the Middle East caused a bearish turn in the US dollar markets, since investors bet on a deceleration in reciprocal attacks with missiles. The global turn outside the US dollar sent the offers of the cable back above the 1,3500 zone.
On Tuesday, the governor of the Bank of England (BOE), Andrew Bailey, will testify before the Committee of Economic Affairs in the United Kingdom Parliament. The United Kingdom has been dealing with an erratic economy in recent months, and Governor Bailey is expected to maintain the BOE message.
The president of the Federal Reserve (Fed), Jerome Powell, will also make his appearance in the government testimony, starting two days of speeches before the economic committees of Congress and the Senate. Market attention will be much more focused on the head of the Fed, Powell, since investors hope to see how the Fed will react to the continuous mockery of the US president, Donald Trump, on the reluctance of the Fed to make feat cuts that could benefit the budget bill that increases the Trump deficit.
GBP/USD price forecast
The GBP/USD recovered above the 1,3500 zone on Monday after a failed attempt to overcome the short -term technical barrier last week. A fall in the early hours saw the cable take a technical rebound from the key level of 1,3400, which caused a prolonged increase during the negotiation session of the beginning of the week.
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.
