- The GBP/USD extends its fall to around 1,3490 in the Asian session on Friday.
- The uncertainty about the fed rate cuts brakes the appetite for the risk, weakening the sterling pound.
- Operators expect the United Kingdom retail sales report, which will be published later on Friday.
The GBP/USD pair extends the fall to about 1,3490 during Friday’s Asian negotiation hours, pressed by a renewed demand of the US dollar (USD). The operators prefer to stay out of the margin waiting for the deadline of tariffs of the US president, Donald Trump, and the Federal Reserve Policy Meeting (FED) next week. Later on Friday, the publication of the United Kingdom Retail Sales Report will be the Center for Care.
The uncertainty about the cuts of interest rates by the Central Bank of the US has stopped the appetite for the risk, which weakens to the pound sterling (GBP). The operators reduce their bets that the Fed will make a rate cut at the July meeting, waiting less than two reductions this year, since unemployment requests have fallen for six consecutive weeks.
Meanwhile, the governor of the Fed, Christopher Waller, made moderate comments, saying that those responsible for the policy should lower the rates this month to support a labor market that shows signs of weakness. The markets believe to a large extent that the Fed will remain unchanged when it meets next week, but that will probably cut the rates in September and once again before the end of the year.
As for the pound, the operators are increasingly sure that the Bank of England (BOE) will cut the interest rates in their August monetary policy meeting, which could weigh on the cable. However, the operators will take more signals from the retail sales data of the United Kingdom that will be published on Friday, which is expected to show an increase of 1.2% intermencing in June, after a 2.7% drop in May. If the data shows a stronger result than expected, this could boost the GBP against the USD in the short term.
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.
