- The GBP/USD backed on the eighth consecutive day on Tuesday.
- The US IPC inflation increased in June, which decreased the hopes for fed rate cuts.
- Soon on Wednesday: IPC inflation of the United Kingdom, business inflation of the US IPP.
The GBP/USD lost weight due to eighth consecutive session on Tuesday. The global appetite due to the risk deteriorated after the inflation of the US Consumer Price Index (CPI) increased in June, projecting a long shadow fed by tariffs on investors who expected a rapid turn towards new cuts of fees by the Federal Reserve (Fed) in the third quarter.
The US IPC inflation increased towards the end of the second quarter. Although the figures were kept online or exceeded medium forecasts, investors still feel the pressure of growing price pressures. The annualized general inflation of the CPI increased to 2.7% year -on -year in June, moving in the opposite direction to the target range of 2% Fed policy. With the inflationary pressures still bubbling in the background, the thin hopes of the market of an early cut of rates by the Fed have evaporated.
Hello inflation, goodbye rates cuts
According to the Fedwatch of the CME tool, the fees operators have completely discounted a pause at the Julio Fed meeting. Rate markets are still waiting for two cuts in 2025 despite still warm inflation measures, with an 80% probability of at least one cut of a discounted spot for October.
Cable operators will have to prepare for a second and third tour of the Inflation Carousel on Wednesday: the IPC inflation figures of the United Kingdom (UK) will be published early in the London session, followed by more US inflation data of the Production Price Index (IPP). A new Lot of Labor Data of the United Kingdom is also expected on Thursday, followed by US retail sales figures.
GBP/USD price forecast
The sterling pound (GBP) has fallen almost 3% from top to bottom against the US dollar, falling from a maximum of several years recorded the first day of July. The torque has retreated cleanly through the 50 -day exponential mobile average (EMA) about 1,3500, and the sustained sale pressure has led the cable to hit an ascending line of trend since the minimum of January about 1,2200.
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.
