- GBP/USD wavered near the 1.2500 area on Monday.
- Pound traders are taking a back seat as markets focus on the Dollar.
- Investor sentiment spread in both directions to start the new week.
GBP/USD went full circle on Monday, driven by widespread market flows into and out of the US Dollar (USD) while British Pound (GBP) traders are swept along by the tides. It’s a quiet week on the UK side of the economic calendar, and trade war murmurs, as well as an impending Federal Reserve (Fed) rate decision, are keeping the market’s attention off the Cable trade for now.
The Federal Reserve (Fed) is expected to keep rates steady at its next meeting scheduled for Wednesday, but overall market expectations for more rate cuts for the year are rising. According to the CME’s FedWatch tool, rate markets are pricing in a total of 50 basis points in rate cuts through 2025, up from the previous forecast of 25 basis points.
US President Donald Trump launched his first significant trade dispute over the weekend with Colombia, of all countries, threatening a sweeping 50% tariff on all Colombian goods imported into the US. if the country refused to accept planes loaded with Colombian migrants returning home from the U.S. Most of the dispute took place on social media and had little measurable impact on global markets. Still, President Trump’s tariff threats and his willingness to use them on short notice will likely upset some investors who are accustomed to a less chaotic approach to trade governance.
GBP/USD Price Forecast
GBP/USD has left traces on the charts on either side of the 1.2500 zone on Monday, marking an intraday high above 1.2520 before pivoting back towards the lower side near 1.2480. With price action stuck at technical levels just south of the 50-day EMA at 1.2517, bids are at risk of pricing a near-term top and giving the bears a foothold on the charts. diaries.
GBP/USD Daily Chart
British Pound FAQs
The British Pound (GBP) is the oldest currency in the world (AD 886) and the official currency of the United Kingdom. It is the fourth most traded foreign exchange (FX) unit in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/ USD, which represents 11% of FX, GBP/JPY (3%) and EUR/GBP (2%). The British Pound is issued by the Bank of England (BoE).
The most important factor influencing the value of the Pound Sterling is the monetary policy decided by the Bank of England. The Bank of England bases its decisions on whether it 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, making it more expensive for people and businesses to access credit. This is generally positive for sterling, as higher interest rates make the UK 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. In this scenario, the Bank of England will consider lowering interest rates to make credit cheaper, so that companies will take on more debt to invest in projects that generate growth.
The data released measures the health of the economy and can affect the value of the pound. Indicators such as GDP, manufacturing and services PMIs and employment can influence the direction of the Pound.
Another important piece of information that is published and affects the British Pound is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports during a given period. If a country produces highly in-demand export products, its currency will benefit exclusively from the additional demand created by foreign buyers seeking to purchase 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.
