- The GBP/USD remains under selling pressure around 1,3625 during the Asian session on Thursday.
- The increase in market anxieties on the United Kingdom’s debt position drags the loss of sterling.
- The US employment data for June will be the center of attention later on Thursday.
The GBP/USD pair extends the fall to about 1,3625 during Thursday’s Asian negotiation hours. The sterling pound (GBP) faces some selling pressure in the midst of a mass sale of British government bonds. The operators will be attentive to the US employment data of June later on Thursday, including non -agricultural payroll (NFP), the unemployment rate and average earnings per hour.
British bonds had their greatest sale since October 2022, after the United Kingdom government decided to cut benefits and concerns about the future of the Minister of Finance. The increase in market anxieties on the United Kingdom’s debt position could exert some selling pressure on the cable in the short term.
“Not only British pound is significantly lower, but the Gilts are also under a lot of pressure. I think it is only a crisis of trust in the Labor Government,” said Marc Chandler, a market chief market in Bannockburn Global Forex LLC.
As for the USD, the National Employment Report ADP showed on Wednesday that the private payrolls of the US fell for the first time in more than two years in June, which suggests that the Federal Reserve (FED) could cut rates as soon as in September. The operators will take more clues to US employment data for June.
The US economy is expected to add 110,000 jobs in June, while the unemployment rate is expected to increase slightly 4.3% in the same period. If the reports show a weaker result of the expected, this could weigh on the US dollar (USD) and create a tail wind for the main torque.
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.
