- The GBP/USD collapses while US tariffs generate fears of recession.
- The sterling pound also falls while investors increase the possibilities of a BOE cut in May.
- The operators are attentive to the FED minutes and the US CPI data.
The sterling pound collapses more than 100 pips or 0.90% against the US dollar at the beginning of the week, driven by fears of recession and truncated hopes that the White House could reconsider its position in commercial policies during the weekend. The GBP/USD is quoted at 1,2763 after reaching a daily maximum of 1,2933.
The GBP/USD sinks at 1,2763 as risk aversion returns due to false headlines about tariff break
Risk aversion keeps the US dollar firm on Monday. The news that the White House is considering a 90 -day pause in tariffs for all nations except China, revealed by the US advisor Hastt, triggered a recovery in the GBP/USD, which was ephemeral, since Trump revealed that “he did not say this.” In addition, CNBC revealed that it was “false news.”
Uncertainty keeps restless operators, since US actions have recently turned positive. In the currency space, shelter peers are leading the profits, although the operators must be aware that the actions are also recovering.
Apart from this, the data remains in the background with a little economic agenda in the United Kingdom. However, operators increased their bets that the Bank of England (BOE) would cut the rates at 25 basic points in May.
Fountain: Prime Market Terminal
On the other side of the Atlantic, the US economic calendar is absent, but the operators expect the publication of the latest minutes of the Federal Open Market Committee (FOMC) and inflation data.
The consumer price index (CPI) is expected to decrease from 2.8% to 2.6% year -on -year. It is projected that the underlying CPC drops from 3.1% to 3%. An upward surprise in the data could deepen the fall in global actions, after the president of the FED, Powell, revealed last Friday that the Central Bank of the United States is not in a hurry to reduce the costs of indebtedness.
GBP/USD price forecast: technical perspective
The GBP/USD has exceeded the simple mobile average (SMA) of 1,2810 and is aiming to challenge the 50 -day SMA in 1,2730. If it is exceeded, the following objective would be the 1,2700 mark, followed by the single mobile average (SMA) of 100 days in 1,2627. In the surprising case of a recovery of the pound, the first resistance would be 1,2800, followed by the 200 -day SMA. Greater bullish potential in 1,2900 is expected.
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.
