The sterling pound bounces against the dollar in the midst of the US economic uncertainty.

  • The sterling pound is recovered about 1,2930 against a US dollar pressed in the midst of the US economic uncertainty.
  • Investors have become increasingly confident that the US economy could enter recession.
  • The Prime Minister of the United Kingdom, Starmer, promises to protect national companies from a possible global commercial war.

The sterling pound (GBP) bounces about 1,2930 against the US dollar (USD) in the European session on Monday after reaching a minimum of one month of 1,2830 earlier in the day. The GBP/USD torque attracts offers while the US dollar faces pressure due to the imposition of reciprocal tariffs by the US president, Donald Trump, Wednesday. The US dollar index (DXY), which follows the value of the dollar against six main currencies, drops to about 102.40.

The participants of the financial market have become increasingly concerned about the economic perspectives of the USA since the president of the Federal Reserve (Fed), Jerome Powell, declared Friday that the tariffs higher than expected announced by the President could lead to a resurgence of inflation and slower economic growth. “We face a highly uncertain perspective with high risks of unemployment and higher inflation,” Powell said in his comments prepared at the annual conference of the company for the progress of the edition and business writing.

When asked about the impact of Trump’s tariffs on monetary policy perspectives, Powell continued with the “wait and see” approach and said: “The Fed is well positioned to expect greater clarity before considering policy adjustments.”

Meanwhile, market experts now see a greater possibility that Trump’s drastic and severe tariffs about US business partners can push the US economy to a recession. Goldman Sachs and JP Morgan investment bank signatures have raised the probability that the US enters 45% and 60% recession, respectively.

This week, investors will focus on the US Consumer Price Index (CPI) for March, which will be published on Thursday. The impact of US CPI data is expected to be limited in the US dollar unless there is a dramatic change, since market expectations on the Fed monetary policy perspective will probably be driven by consumer inflation expectations driven by tariffs.

Daily summary of market movements: sterling pound demonstrates high volatility

  • The sterling pound exhibits a highly volatile action against its peers at the beginning of the week. The British currency is affected by the uncertainty caused by Trump’s tariffs that are expected to hit the economy of the United Kingdom (UK).
  • It is expected that the companies of the United Kingdom in front of a significant competition in the global market, since the nations business owners to which significantly higher tariffs were imposed by the US would seek other markets for their products. Such scenario would be unfavorable for a country that is already struggling to deal with tight financial conditions.
  • The Bank of England (BOE) maintains a strict position of “gradual and cautious” on a greater relief of monetary policy, since inflationary pressures remain significantly far from the desired rate of 2%. The chances of the United Kingdom inflation to be reduced in the short term are at least, since BOE officials have already warned that price pressures could accelerate before returning to the 2% path due to the highest prices of energy.
  • Meanwhile, the Prime Minister of the United Kingdom, Keir Starmer, has promised to protect national storm from Trump’s tariffs. “We are ready to use industrial policy to help protect British storm companies,” Starmer said during the weekend, Reuters reports. Starmer also indicated that he wants to strengthen alliances and reduce commercial barriers.
  • This week, investors will focus on the monthly data of the gross domestic product (GDP) and the February industrial production data, which will be published on Friday.

Technical Analysis: The sterling pound is recovered near the 20 -day EMA

The pound sterling tries a recovery movement from 1,2830 against the US dollar on Monday after correcting abruptly from the maximum of six months of 1,3207 registered on Thursday. The GBP/USD torque is traded near the 20 -day exponential (EMA) mobile average, around 1,2930. The short -term trend will become bullish if the pair manages to stay above the 20 -day EMA.

The 14 -day relative force (RSI) index falls below 60.00, indicating that the bullish impulse is over. However, the bullish inclination is maintained until the level of 40.00 is maintained.

Looking down, the 50% fibonacci setback outlighted from the maximum of the end of September to the minimum of mid -January about 1,2770 will act as a key support area for the torque. On the positive side, the maximum of April 3, 1,3207 will be a key resistance zone.

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

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