- The GBP/USD weakens about 1,3435 in the first bars of the European session on Thursday.
- The Federal Court of Commerce annulled Trump’s reciprocal tariffs, supporting the US dollar.
- The probabilities of more BOE rates cuts fall as food inflation increases.
The GBP/USD torque quotes in negative territory around 1,3435 during the early European session on Thursday. The dollar is strengthened against the sterling pound (GBP) after the US Trade Court blocks the wide tariffs of US President Donald Trump. The preliminary reading of the US gross domestic product report (GDP) for the first quarter (Q1) will be the culminating point later on Thursday.
The May meeting summary of the Federal Open Market Committee (FOMC) suggests that uncertainty about economic perspectives has increased even more. Federal Reserve officials (FED) said that fulfilling their dual objectives of full employment and low inflation has been complicated due to uncertainty in politics. Those responsible for the Fed emphasized the need to maintain interest rates for some time, since policy changes in the US cloud economic perspectives.
Early Thursday, a Federal Court of the United States blocked Trump’s “Day of Liberation Day” tariffs so that they would not come into force. A Federal Trade Court ruled that an emergency law invoked by the White House does not grant Trump the unilateral authority to impose tariffs on almost all countries. This holder provides some support to the dollar and acts as a wind against the main torque.
The possibility of more interest rate cuts from the Bank of England (BOE) decreases as food inflation in the United Kingdom (UK) has increased during the fourth consecutive month, indicating signs of persistent inflation. Barclays analysts no longer expect the BOE to cut rates in June and now predict that the base rate will fall to 3.5% by February 2026, instead of at the end of this year as previously predicted. A less moderate posture of the Central Bank of the United Kingdom could help limit the losses of the GBP in the short term.
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.
