- The GBP/USD operates with slight losses around 1,3275 in the Asian session on Friday.
- The decrease in fears on commercial tensions supports the US dollar.
- Operators increase additional fees bets on the BOE at their May policy meeting.
The GBP/USD pair moves down about 1,3275 during Friday’s Asian negotiation hours. Positive developments around commercial conversations between the US and China provide some support for the US dollar (USD). Investors will closely follow the US Employment Report of April later on Friday, including non -agricultural payroll (NFP), the unemployment rate and average gain per hour.
Early Friday, China said it is evaluating the possibility of commercial conversations with the United States, the first sign since the US president Donald Trump increased tariffs in April. The decrease in a commercial war between the two largest economies in the world and the hope that negotiations can begin between both parties to the dollar and create a wind against the main torque.
The data published by the US Department of Labor on Thursday showed that the initial weekly unemployment applications in the US for the week that ended on April 26 increased to 241,000, compared to the previous week of 223K (reviewed from 222K). This figure exceeded the 224K market consensus. In addition, the Index of Purchasing Managers (PMI) Manufacturing ISM fell to 48.7 in April compared to 49.0 previous, stronger than the expected 48.0.
The governor of the Bank of England (BOE), Andrew Bailey, warned that the Central Bank of the United Kingdom should consider the risk of a global commercial war in the consequences of Trump’s tariffs. Concerns about the uncertainty of commercial policy have led operators to increase their bets supporting BOE to cut interest rates at the May policy meeting. Financial markets have discounted almost 96% probability that the BOE cuts its rate in a quarter to 4.25% when you announce its next movement on May 8, according to a Reuters survey.
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.
