- The GBP/USD fell 0.6% on Wednesday, going back to short -term minimal.
- The Fed kept the stable rates, as expected, but worries about tariffs are raising caution flags.
- The BOE is expected to announce a rate cut on Thursday.
The GBP/USD backed on Wednesday, losing six tenths of one percent while the markets kept a firmly planted foot in the US dollar, safe refuge. The Federal Reserve (Fed) maintained the rates without changes, as expected in general, but those responsible for the Fed policy, firmly trapped in an “wait and see” approach, hindered the appetite for the risk during the market session in the middle of the week. The Bank of England (BOE) is as follows with its own decision on rates on Thursday, and it is widely expected to deliver another cut of a point.
Forex today: All eyes are placed at the Bank of England
The feeling of the market decreased after the press conference of the president of the FED, Jerome Powell. He declared that US commercial tariffs could hinder the FED objectives for inflation and employment this year. Powell warned that continuous political instability could force Fed to adopt an ‘wait and see’ approach to interest rates. Although the feeling of consumers and companies was severely affected by Trump administration tariffs, the lack of significant negative economic data complicates the justification of the Fed for immediate changes in interest rates.
Powell of the Fed: The right thing is to expect more clarity
It is widely expected that the next decision on BOE rates on Thursday is another cut of a quarter point, the fourth cut of the United Kingdom Bank since it reached maximum rates in 2023. The monetary policy committee (MPC) of the BOE vote in a proportion of nine to one in favor of delivering another rate cut in an effort to help strengthen the staggering economy of the United Kingdom is expected.
GBP/USD price forecast
The GBP/USD stumbled, falling below the important price level of 1,3300 and maintaining the price of the price trapped in a short -term consolidation trap. Despite the intradic weakness, the cable remains firmly rooted on the tall side of the recent impulse, with the par quoting near maximums of several years above 1,3400.
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.
