- The sterling pound struggles to maintain the immediate minimum around 1,3200 against the US dollar while operators reduce the betting of Fed’s interest rate cuts.
- Economists expect the BOE to cut interest rates next week.
- Investors expect the reports of non -agricultural payroll and the USM manufacturing PMI for July.
The sterling pound (GBP) remains with losses about a minimum of almost 11 weeks around 1,3200 against the US dollar (USD) during the European negotiation session on Friday. The GBP/USD struggles to gain ground while the US dollar firmly quotes, with operators by reducing bets that support interest rate cuts by the Federal Reserve (Fed) at the September policy meeting.
At the time of writing, the American dollar index (DXY), which follows the value of the dollar against six main currencies, clings to profits about a new maximum of two months around 100.00.
According to the CME Fedwatch tool, the probability that the Fed cuts interest rates at the September meeting has fallen to 39.2% since 58.4% seen a week ago.
A series of factors have contributed to this rapid setback of the expectations that the Fed will lower the rates in September. First, the recent economic data, including the growth of the Gross Domestic Product (GDP) of the Second Quarter of the United States as expected than expected and the Personal Consumption Expenditure Index (PCE) June underlying. Second, signs of the president of the FED, Jerome Powell, who suggested that there is no hurry for interest rate cuts.
On Wednesday, the Fed maintained stable interest rates in the current range of 4.25% -4.50% per fifth consecutive meeting. Jerome Powell suggested that monetary policy adjustments are currently inappropriate since “tariffs have exerted pressure on some goods.”
Daily summary of market movements: the pound sterling operates with caution in front of its peers
- The sterling pound operates with caution in front of its peers on Friday, with investors changing its approach to the monetary policy decision of the Bank of England (BOE), which will be announced on Thursday.
- Market experts predict that the BOE will reduce interest rates at 25 basic points (PBS) to 4% and indicate a pause since price pressures remain well above the 2% target. “A unique cut next week seems likely since inflation is expected to remain above the 2% target of the BOE until 2026 and 2027,” said Pantheon Macroeconomics economists, Reuters reports.
- In June, the United Kingdom Consumer Price (CPI) (UK) stood at 3.6% year -on -year, above the expectations and the previous publication of 3.4%.
- In Friday’s session, the GBP/USD torque will be influenced by the US non -agricultural payroll data (NFP) and the purchasing managers index (PMI) ISM manufacturing for July, which will be published during negotiation hours in North America.
- The US NFP data could significantly influence market expectations on the monetary policy perspective of Fed. Economists expect the US economy to have added 110K new workers, less than the 147K jobs created in June. The unemployment rate is expected to rise to 4.2% from 4.1%.
- At Wednesday’s press conference, Jerome Powell declared that “the downward risks for the labor market are certainly evident,” however, so far the employment -related indicators have shown a stable labor market within a cooling trend.
- Meanwhile, the ISM manufacturing PMI is expected to be slightly higher by 49.5 from 49.0 in June, suggesting that the activity in the US manufacturing sector continued to decrease, but at a moderate rhythm.
Technical Analysis: The sterling pound weakens for H&S break
The libra sterling operates vulnerable about 1,3200 against the US dollar on Friday. The GBP/USD PARK Perspective has become bassist since it has broken below the neck line of a graphic and shoulder graphic pattern (H&S).
The 20 -day exponential (EMA) mobile average, with descending slope, about 1,3414, also suggests that the short -term trend is bassist.
The 14 -day relative force index (RSI) ranges well below 40.00, almost at overall levels, indicating that a bearish impulse is maintained.
Looking down, the minimum of May 12, 1,3140 will act as a key support zone. On the positive side, the maximum of July 30 about 1,3385 will act as a key barrier.
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.
