- The sterling pound falls slightly to about 1,3475 against the US dollar while the dollar bounces slightly.
- A US Federal Court of Federal Appeals temporarily puts the decision of a lower court against Trump’s tariffs.
- Investors expect the US PCE inflation data for April.
The sterling pound (GBP) falls to about 1,3475 against the US dollar (USD) in the European negotiation session on Friday. The GBP/USD torque faces saleswoman after a Federal Court of Federal Appeals of the US temporarily stopped the decision of a federal trade court that blocked most of the tariffs of President Donald Trump. The movement affected the feeling of the market due to the renewed fears on how the impact of a commercial war between the US and its main commercial partners could affect growth.
The American dollar index (DXY), which follows the value of the dollar against six main currencies, rises slightly to about 99.50.
On Wednesday, a US trade court ordered the permanent suspension of reciprocal tariffs, related to fentanyl and border negligence in 10 calendar days for abusing the Law of International Emergency Emergency Powers of 1977 (IEEPA). The court accused Trump of invoking a “national emergency” to execute tariff policies, which should have been imposed with the approval of the Congress.
However, the Court of Appeals arrested the decision due to the appeal of the Government and ordered the plaintiffs [pequeñas empresas de EE.UU.] In the cases that respond before June 5, the Administration before June 9, according to a Firstpost report.
Apart from the judicial problems related to tariffs, another reason behind the moderate recovery of the US dollar is a clear sign of the Federal Reserve (Fed) that it will only focus on maintaining the dual mandate of the Central Bank, dismissing Trump’s recent political pressure.
The president of the Fed, Jerome Powell, said after his first meeting face to face with Trump from the return of this to the White House that the path of politics will depend completely on “incoming economic information and what that means for perspectives,” Reuters reported. Powell also said he did not express his intentions to Trump regarding monetary policy perspectives. Trump said he believes that Fed is making an error by not lowering interest rates.
To obtain new clues about the US monetary policy perspectives, investors expect the publication of the US PERSONAL CONSUMPTION EXPENSE PRICE INDEX (PCE) for April at 12:30 GMT. According to the CME Fedwatch tool, the Fed is not expected to cut interest rates until September.
What moves the market today: the sterling pound is stable in a stable way in front of its peers
- The sterling pound is maintained a large lateral measure in the face of its main peers during Friday’s European negotiation hours. The British currency is expected to close May in a positive note against the US dollar for the fourth consecutive month.
- Market expectations for a moderate policy expansion cycle by the Bank of England (BOE) and the closure of trade agreements with Washington, New Delhi and Brussels have helped strengthen the currency of the United Kingdom.
- According to a Reuters report, the futures market indicates that operators expect interest rates to fall around 38 basic points (PBS) by the end of this year, which implies a 25 -page rate cut and approximately 50% probability of a second cut.
- The main triggers behind the reduction of BOE’s bets are the solid economic growth in the first quarter and higher inflation than projected.
- The International Monetary Fund (IMF) has slightly raised its GDP growth prognosis of the United Kingdom for the current year to 1.2% since its previous estimate of 1.1%. The upward review occurred after the optimistic GDP data of the first quarter, which showed that the economy expanded at a robust rhythm of 0.7% compared to the 0.1% observed in the last quarter of 2024.
- On Thursday, the governor of the BOE, Andrew Bailey, guided a “gradual and careful approach” in the reduction of interest rates, citing that the economy is “difficult to read.” Bailey warned about “the strengthening of food inflation and other categories of products.” In the Employment Front, Bailey said that the United Kingdom labor market data is quite “in line with our expectations” and that “the salary increase in deceleration remains intact.”
Technical analysis: The sterling pound maintains the key support level of 1,3445
The sterling pound falls to about 1,3470 against the US dollar on Friday after a strong upward movement the previous day. The GBP/USD pair maintains the key horizontal support drawn from the maximum of September 26, 1,3434 and rises to about 1,3500. The prospects of the PAR are still firm since the 20 -day exponential (EMA) mobile average is inclined to rise around 1,3395.
The 14 -day relative force index (RSI) struggles to stay above 60.00. The bullish impulse would fade if the RSI slides towards the range of 40.00-60.00.
On the positive side, the maximum of January 13, 2022 of 1,3750 will be a key obstacle to the pair. Looking down, the 20 -day EMA will act as an important support area.
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
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.
