- The GBP/USD has difficulty capitalizing its intradication in the midst of a modest strength of the USD.
- The divergence in the perspectives of the Fed and the BOE further contributes to limit the pair of currencies.
- The configuration seems inclined in favor of the bassists and supports the prospects of greater losses.
The GBP/USD pair bounces a few pips from the minimum of the Asian session and currently trades around the round 1,2400 figure, practically unchanged in the day. However, the rise remains limited to a modest fortress of the US dollar (USD), which, in turn, justifies some caution for upward operators.
The new tariff threats of the president of the US, Donald Trump, boosts the demand of the US dollar as a safe refuge. Meanwhile, the solid US employment data published on Friday, together with the expectations that Trump’s protectionist policies revive inflation, should allow the Federal Reserve (FED) to maintain stable rates and offer additional support to the USD. In addition, the gloomy perspectives of the Bank of England (BOE) should contribute to limit the GBP/USD torque.
Even from a technical perspective, the recent repeated failures near the single mobile average (SMA) of 50 days suggest that the lower resistance path for the GBP/USD torque is down. Therefore, any upward movement could be seen as an opportunity for sale and remain limited near the 1,2500 psychological brand. The latter should act as a key pivot point for short -term operators, which if it exceeds decisively should pave the path for additional short -term profits.
The GBP/USD torque could then accelerate the positive movement towards the region of 1,2575-1.2580 en route to the round figure of 1,2600. The impulse could extend even more towards the intermediate obstacle of 1,2645-1,2650, above which spot prices could aim to challenge the 100-day SMA, currently located near the region of 1,2715-1.2720.
On the other hand, a weakness below the immediate support of 1.2375-1.2370 could make the GBP/USD torque weaken even more below the round figure of 1,2300, towards testing the minimum last week, around the area average of 1,2200. Some continuation sales should pave the way for a fall to the following relevant support near the 1,2175 region.
GBP/USD Daily Graphic
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.
