- The GBP/USD backed the 1.3000 area on Tuesday.
- The markets prepare for a double blow of the Fed and BOE rates decisions.
- The Fed is expected to maintain stable rates until April, the BOE is also planned stable.
The GBP/USD was negotiated with little volume on Tuesday, but still backed away the 1.3000 zone, marking a new maximum of 19 weeks before the decisions of high impact rates of both the Federal Reserve (Fed) and the Bank of England (BOE). It is widely expected that the Fed maintains the stable rates this week, but a new update on the expectations of interest rates of the Federal Open Market Committee (FOMC) will attract many looks.
The last decision of the Federal Reserve (FED) is scheduled for Wednesday. According to the Fedwatch of the CME tool, the rates markets generally anticipate that the Fed will keep the fees without changes in the next two meetings, with the next cut of an expected spot at the June meeting of the Federal Open Market Committee (FOMC). However, the latest FomC interest rates projections will be published this week. They could send the expectations of feature cuts to the edge if the expectations of those responsible for the monetary policy of the Fed are drastically deviate from the current market projections.
The next decision of BOE rates on Thursday will attract the attention of some cable operators, but not as much as the presentation of the Fed during the market session in the middle of the week. After the last Tasas of the BOE, last month, the United Kingdom Central Bank is expected to vote 7 to 2 to keep the rates unchanged in 4.5%, with two particularly moderate policies responsible for vote in favor of another cut of a quarter point.
GBP/USD price forecast
The GBP/USD is testing its third consecutive week of profits, going back to the 1.3000 zone for the first time since last November. The pair now negotiates 7.5% above the minimum of several months in January 1,2100. The short -term price action continues to be inclined firmly in favor of the cable bullies, however, the GBP/USD could have overexted since the technical oscillators remain deeply in overcompra territory.
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 commercial 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.
