- The GBP/USD records modest profits around 1,3405 during the early Asian session on Wednesday.
- Employment offers in the US fell to the lowest level since September; The consumer’s confidence of the CB fell below the consensus.
- Greene of the BOE said Trump’s tariffs will probably reduce inflation in the United Kingdom.
The GBP/USD pair operates with slight profits about 1,3405 during the early Asian session on Wednesday. The economic data of the US weakest than expected drag the dollar down. Later on Wednesday, the US employment change will be published, together with the Personal Consumption Expenditure Price Index (PCE) and the preliminary report of the Gross Domestic Product (GDP) of the first quarter.
The data published by the US Labor Statistics Office on Tuesday showed that employment offers in the US fell to 7.19 million in March, the lowest level since September 2024, compared to the 7.48 million reviewed in February. This figure was below the 7.5 million market consensus. Meanwhile, the Conference Board Conference Conference Index decreased to 86.0 in April from 93.9 in March (reviewed from 92.9). This figure registered the lowest level since April 2020.
The weak labor demand and feeling data in the US increased concerns about economic impulse amid greater uncertainty, which undermined the dollar and created a wind in favor for the GBP/USD.
On the other hand, the growing bets that the Bank of England (BOE) will reduce interest rates in the May policy meeting could limit the bullish potential for pound sterling (GBP). Financial markets have valued almost 96% probability that the BOE reduces its rate in a quarter to 4.25% when it announced its next movement on May 8.
The BOE policy head, Megan Greene, said last week that the tariffs of US President Donald Trump would probably lead to lower inflation instead of higher in the United Kingdom, but remained great uncertainties on the plan and the impact of a recent tax increase in the United Kingdom for employers.
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.
