- The GBP/USD remained caught in congestion about 1,3400 on Thursday.
- The US retail sales figures exceeded expectations, and the United Kingdom’s labor data softened.
- The cable bullish impulse has run out of gas early, struggling to keep buyers along the way.
The GBP/USD ranged around the 1,3400 region on Thursday, dealing with a new congestion after a brief respite on the sustained sales pressure. The United Kingdom’s labor data (UK) in general did not meet the expectations, and US retail sales were stronger than expected.
The United Kingdom added 25.9K new applicants for unemployment benefits in June, more than expected but still below 33.1k the previous month. The unemployment rate of the United Kingdom also rose, increasing to 4.7% from the previous 4.6%. On the United States side (USA), the inflation of the production price index (IPP) cooled faster than expected, which further reinforces the confidence in the market in which the repercussions of tariffs will have less impact on inflation than the federal reserve officials (FED) fear.
On Friday, the United Kingdom data will remain free and clear on the data agenda, while US markets will still have to deal with the consumer’s feeling index of the University of Michigan (UOM) for July. The aggregate results of the UOM survey are expected to continue advancing from a lean recovery, and it will be forecast to increase to 61.5 from 60.7.
GBP/USD price forecast
The cable’s mid -week rebound has cut a unilateral short term after the cable fell from maximum of several years in early July. The GBP/USD seems to be ready to confirm a technical rebound from the 1,3400 zone, but only if the purchase pressure can keep the impulse.
GBP/USD daily graphics
LIBRA ESTERLINA – FREQUENTLY QUESTIONS
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.
