- The GBP/USD pair reached a maximum of four months of 1,2989 on March 13.
- The US dollar could be further depreciated, since the recent US inflation data fed the expectations that the Fed will make rates cuts soon.
- Rics’s housing prices balance fell to 11% in February, marking its second consecutive fall.
The GBP/USD tries to extend its profits for the third consecutive day, quoting around 1,2960 during the Asian session on Thursday. The GBP/USD torque goes up while the US dollar (USD) faces winds against in the middle of the continuous uncertainty about the tariffs of US President Donald Trump and the growing concerns about a possible recession in the US.
The dollar could lose additional ground as US inflation cooled more than anticipated in February, increasing the speculation that the Federal Reserve (Fed) could cut interest rates before expected. Market participants now expect the US Price Price Index (IPP) and Weekly Unemployment Applications on Thursday to obtain more economic clues.
The general monthly inflation of the United States slowed 0.2% in February from 0.5% in January, while underlying inflation softened 0.2%, below the 0.3% forecast. In annual terms, general inflation decreased to 2.8% from 3.0%, while underlying inflation fell to 3.1% from 3.3%.
In the United Kingdom (the United Kingdom), the last survey of the RICS residential market showed that the housing price balance fell to 11% in February, marking its second consecutive fall. This figure was below the market expectations of 20% and was lower than the reading of 21% in January.
The Prime Minister of the United Kingdom, Keir Starmer, expressed optimism that Great Britain could avoid US tariffs about steel and aluminum, emphasizing a “pragmatic approach” in negotiations while maintaining all open options. Unlike the European Union (EU), which has indicated immediate retaliation against Trump tariffs, the United Kingdom reaffirmed its commitment to commercial conversations with the United States (USA).
Meanwhile, the 10 -year bond of the United Kingdom shot at 4.68%, its highest level in two months, as the expectations grew that the Bank of England (BOE) will maintain high interest rates for a prolonged period. Operators now anticipate only a 52 basic points rate cut (PBS) in 2025, reducing the previous forecasts of a more aggressive relief. Investors now expect the monthly GDP data from the United Kingdom for January on Friday, which could provide more information about the country’s economic perspectives.
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.
