- The GBP/USD rises as the US dollar weakens amid persistent concerns about global and national economic perspectives.
- The US consumption price index rose 2.4% year -on -year in March, lowering 2.8% in February.
- USA imposed a strong increase in tariffs on Chinese imports, raising the total rate to 145%.
The GBP/USD is on its way to its fourth consecutive daily gain, quoting about 1,3030 during the Asian session on Friday. The pair continues to strengthen as the US dollar loses ground amid persistent concerns about global and American economies.
The US dollar index (DXY), which follows the value of the dollar against a basket of six main currencies, has fallen to around 100.20 at the time of writing. The fall of the DXY follows a surprising decrease in US consumer prices for March, changing the investor’s approach to the next key data launches: the March Price Price Index (IPP) and the feeling of the preliminary Michigan consumer, both scheduled for later today.
The US consumption price index (CPI) showed that general inflation was softened to 2.4% year -on -year, lowering 2.8% in February and below the expectations of 2.6%. The underlying IPC, which excludes volatile food and energy prices, rose 2.8%, lowering 3.1%and without reaching the 3.0%forecast. In monthly terms, the general CPI fell 0.1%, while the underlying CPC rose 0.1%.
The president of the United States, Donald Trump, announced a 90 -day pause in the new tariff increases for most US business partners. While the tariffs on China still rose, the widest relaxation of commercial tensions helped to calm global economic fears, improving the feeling of the market and supporting the sterling pound, sensitive to risk.
With the appetite for the risk improving, the operators have reduced their expectations of aggressive timps of rates by the Bank of England (BOE). The markets now anticipate three cuts from a quarter to the end of the year, in line with the previous BOE orientation for a gradual and quarterly flexibility cycle. A cut in May remains very likely, with expected additional movements in August and November.
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.
