- The GBP/USD reversed the initial profits to drop another 0.34% on Thursday.
- The BOE made a warehouse -spot rate cut.
- The support for the sterling pound evaporated as the global markets focused on commercial holders.
The GBP/USD began on Thursday with an early burst of profits, driven by the Bank of England (BOE) that handed over a rates cut of a widely anticipated point rates. However, the bullish impulse behind the sterling pound evaporated quickly as the markets focused on the commercial headlines of the United States (USA). Investors expect rapid progress in trade agreements that allow the US to reduce their own self -imposed tariff posture.
The feeling of the market remained firmly on the high side and reinforced the US dollar (USD) after the Trump administration announced an imminent commercial agreement between the US and the United Kingdom (UK) that will allow the United Kingdom to avoid “reciprocal” tariffs continuous his own tariffs on ‘Day of Liberation’. A 10% general tariff will still be imposed to all imports to the US from the United Kingdom, which could affect the feeling of the market in the near future.
Key imports, such as refined ethanol, have received a total suspension of tariffs by the Trump administration. According to the available data, the US has not imported refining ethanol from the United Kingdom in at least 15 years.
GBP/USD price forecast
The GBP/USD has extended to a second day of losses, giving another a third of a percentage point and sliding again to the region below 1,3250. The pair quickly lost control of the level of 1,3300 this week, and the price action is directed towards a new bearish challenge of the 50 -day exponential mobile (EMA) average about 1,3075.
GBP/USD daily graphics
LIBRA ESTERLINA FAQS
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.
