- The sterling pound shows fortress about 1,3650 against the US dollar after the announcement of the high fire between Israel and Iran.
- The president of the FED, Powell, states that the Central Bank still needs time to evaluate the impact of tariffs on inflation.
- The governor of the BOE, Bailey, expresses concerns about the weakening of the strength of the labor market.
The pound sterling (GBP) maintains profits about a new three years around 1,3650 against the US dollar (USD) during Wednesday’s European negotiation hours. He GBP/USD It is strengthened as the US dollar continues to have a lower yield against its peers, since its demand as a safe refuge has decreased significantly after the announcement of a high fire between Israel and Iran on Tuesday.
During the European negotiation session, the US dollar index (DXY), which tracks the value of the dollar against six main currencies, struggles to maintain the weekly minimum around 98.00.
On Tuesday, the president of the United States (USA), Donald Trump, announced that a truce between Israel and Iran has entered into force and urged them not to violate it. “The stop the fire is already in effect. Please, do not violate it!” Trump wrote in a publication in Truth Social.
Meanwhile, support to maintain interest rates at their current levels by the president of the Federal Reserve (Fed), Jerome Powellin his semiannual testimony before the Financial Services Committee of the US Chamber on Tuesday he failed to raise the US dollar.
“I don’t think we should rush while the economy is strong, and uncertainty is high around the tariff debate not yet resolved,” Powell said, according to Reuters. He indicated that the Central Bank will closely monitor the “impact of tariffs on inflation during June and July” and expressed confidence that “interest rate cuts would arrive before if the Central Bank sees that inflation driven by tariffs is not as strong as expected.”
The sterling pound remains stable while Bailey del Boe warns of labor market risks
- The sterling pound seems to be generally stable in front of its main peers on Wednesday, even when the governor of the Bank of England (BOE), Andrew Bailey, warned about the downward risks for the United Kingdom labor market (United Kingdom) and reiterated a gradual path of reduction of interest rates in his testimony before the Committee of Economic Affairs of the Lores on Tuesday.
- “We are [BoE] Starting to see a weakening of the labor market, and it is likely that salary agreements decrease“Bailey said. He added that the increase in employers’ contribution to social security schemes seems to be” affecting the labor market. “
- Last week, Andrew Bailey also declared in the announcement of monetary policy that the Central Bank will closely monitor the risks of upward inflation and the risks of the labor market down after leaving interest rates without changes in 4.25%, with a 6-3 vote in favor.
- Meanwhile, the data of the latest employment surveys have also shown a slowdown in job vacancies. The Indeed Recruitment Platform showed that labor vacancies decreased by 5% in mid -June compared to its level at the end of March, Reuters reported.
- This week, the US dollar will be influenced by the US Expenditure Price Index (PCE) of the US for May, which will be published on Friday. The inflation indicator is expected to show the FED show that price pressures grew at a rapid year -on -year rate. It is estimated that the inflation data of the underlying PCE – that exclude volatile food and energy prices – have accelerated to 2.6% year -on -year from 2.5% in April.
Technical Analysis: Libra sterling is kept in profits above 1,3600
The sterling pound clings to profits about a new maximum of three years around 1,3650 against the US dollar on Wednesday. The short -term trend of the GBP/USD torque remains bullish since the 20 -day exponential (EMA) mobile average is inclined to rise around 1,3513.
The 14 -day relative force (RSI) index bounces above 60.00. A new bullish impulse would arise if the RSI remains above that level.
Looking down, the minimum of Monday in 1,3370 will act as a key support zone. On the positive side, the maximum of January 13, 2022 about 1,3750 will act as the key barrier.
FAQS EMPLOYMENT
The conditions of the labor market are a key element to evaluate the health of an economy and, therefore, a key factor for the assessment of currencies. A high level of employment, or a low level of unemployment, has positive implications for consumer spending and, therefore, for economic growth, which drives the value of the local currency. On the other hand, a very adjusted labor market – a situation in which there is a shortage of workers to cover vacancies – can also have implications in inflation levels and, therefore, in monetary policy, since a low labor supply and high demand lead to higher wages.
The rhythm to which salaries grow in an economy is key to political leaders. A high salary growth means that households have more money to spend, which usually translates into increases in consumer goods. Unlike other more volatile inflation sources, such as energy prices, salary growth is considered a key component of the underlying and persistent inflation, since it is unlikely that salary increases will fall apart. Central banks around the world pay close attention to salary growth data when deciding their monetary policy.
The weight that each central bank assigns to the conditions of the labor market depends on its objectives. Some central banks have explicitly related mandates to the labor market beyond controlling inflation levels. The United States Federal Reserve (Fed), for example, has the double mandate to promote maximum employment and stable prices. Meanwhile, the only mandate of the European Central Bank (ECB) is to maintain inflation under control. Even so, and despite the mandates they have, labor market conditions are an important factor for the authorities given its importance as an indicator of the health of the economy and its direct relationship with inflation.
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.
