- The US CPI rises to 2.7% year -on -year, the first significant increase in five months.
- The underlying inflation is maintained at 2.9%, reinforcing the cautious posture of the Fed.
- Concerns about the growth of the United Kingdom are deepened as the BOE rate cuts are increased to two by the end of the year.
The GBP/USD extended its losses to four consecutive days after the latest inflation report in the United States (USA) showed signs of increase, the first indication that rates caused a prices leap. At the time of writing, the torque is negotiated below 1,3400, with a fall of 0.23%.
The Libra extends its loss streak after the US CPI feeds the Fed maintenance bets
The US Labor Statistics Office (BLS) revealed that the June consumer price index (CPI) increased the more in five months, rising a 2.7% year -on -year, exceeding 2.6% estimates and the increase of 2.4% in May. Excluding volatile elements such as food and energy, the so -called underlying IPC increased by 2.9% year -on -year, above 2.8% reached in three consecutive months, but below 3% forecasts.
The data further reinforces the federal reserve position of maintaining rates without changes at least for the July meeting. The operators are still valuing more than 43 basic points of flexibility towards the end of the year, according to data from the Chicago Commerce Board (CBOT).
The US dollar index (DXY), which tracks the value of the dollar against six main currencies, rises 0.46% to 98.55. The yields of the US Treasury bonds are also on the rise, with the 10 -year note, performing 4,475%, almost four more basic points.
On the other side of the ocean, the United Kingdom’s economic agenda is scarce. However, the United Kingdom GDP report of last week revealed that the economy contracted unexpectedly for the second consecutive month, exercising pressure on the Bank of England (BOE) to make cuts in interest rates towards the end of the year.
Monetary markets show that operators expect two cuts in the bank rate, from 4.25% to 3.75%.
Economic calendar
The US economic agenda will have the production price index (IPP) and retail sales data. In the United Kingdom, the calendar will include the June CPI, which is expected to remain unchanged, with a general inflation of 3.4% and an underlying IPC of 3.5%.
GBP/USD pricing: technical perspective
In the short term, the GBP/USD has a neutral bias at bassist, since the torque seeks to challenge the first support, seen in 1,3369, the minimum of the June 23 cycle. If it breaks, the following support is 1,3300, followed by the 100 -day SMA in 1,3263.
The relative force index (RSI) indicates that sellers have continued to gain impulse, suggesting that a greater decrease is expected.
For a bullish continuation, the GBP/USD must exceed the 50 -day SMA in 1,3495.
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.
