- The GBP/USD entered a third consecutive day of profits on Wednesday, approaching 1,3600.
- The hopes of last minute trade agreements to avoid high tariffs are raising the feeling of investors.
- As operators bet on another setback in the threat of tariffs, the dollar is receiving a new blow.
The GBP/USD rose on Wednesday, registering strong profits for the third consecutive day and approaching the 1,3600 zone. The US dollar (USD) is suffering in all areas, promoted by the expectations of the market for last minute trade agreements between the Trump administration and all others before the deadline of August 1 for “reciprocal” tariffs. The sale pressure of the dollar in the currency space gave an impulse to the sterling pound (GBP), further strengthening the action of the cable to the upward side.
USA And the Trump administration may have made it more difficultnot easier, for foreign companies, at least those based in Japan, to transfer their production chains to the US. There are rumors of another possible commercial agreement in process with the European Union (EU), but key personnel within the Trump team has thrown cold water on those rumors, qualifying them as speculation.
A double report of the purchasing managers index (PMI) is on the agenda for Thursday. The figures of the United Kingdom (UK) and the US in the manufacturing and services components rise in June is expected.
GBP/USD price forecast
The GBP/USD continues to progress towards a firm upward trend, however, the cable needs to overcome the 20 -day SMA in 1,3564. The momentum indicates that buyers are gaining strength, as shown in the relative force index (RSI).
If Libra buyers manage to carry the GBP/USD above the 20 -day SMA, the next resistance would be the level of 1,3600. A rupture of the latter will expose the 1,3650 mark, followed by 1,3700. On the contrary, if the GBP/USD falls below the 50 -day SMA in 1,3520, the following support would be 1,3500. Additional demand levels are below, with the minimum daily of July 21 in 1,3402.
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.
