- The GBP/USD remains plane around 1,3745 in the Asian session on Wednesday.
- The president of the Fed, Powell, said that a cut of interest rates this month cannot be ruled out.
- Trump’s massive tax and expenses bill will return to the Chamber for final approval.
The GBP/USD pair operates in the plane about 1,3745 during Wednesday’s Asian negotiation hours. However, the moderate comments of the president of the Federal Reserve (FED) of the US, Jerome Powell, and the increase in tax concerns could weigh over the dollar in the short term. Investors expect the US employment change report for June in search of a new impulse, which will be published later on Wednesday.
The president of the Fed, Powell, said Tuesday that the US Central Bank will adopt a patient approach to future interest rates reductions, but did not rule out a rate cut at the July meeting, although the decision will depend on the data that arrives. According to the CME Fedwatch tool, short -term interest rates are now valuing almost a probability of one in four of a rate cut for the July meeting after moderate comments, in front of less than one in five previously.
Investors are concerned about the massive tax and expenses bill of the US president, Donald Trump, who could add 3.3 billion in additional national debt. The bill will return to the Chamber for final approval. Fiscal concerns could reduce optimism and contribute to the fall of the USD.
As for the GBP, the governor of the Bank of England (BOE), Andrew Bailey, said last week that there are now signs that the United Kingdom labor market is weakening, and stressed that it is likely that interest rates continue to fall. It is anticipated that the Central Bank of the United Kingdom cut interest rates three times by the end of 2025, taking them to 3.5% to combat slow economic growth and a weaker labor market. Rate cuts are expected in August, September and November 2025, with possible quarterly reductions.
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.
