- The sterling pound renews a maximum of three years about 1,3600 against the US dollar due to the constantly changing fees of the US president Trump over the EU.
- Trump threatens to impose 25% tariffs on Apple for not manufacturing in the US
- The operators see the BOE reducing interest rates only once in the remainder of the year.
The sterling pound (GBP) records a new three -year maximum of about 1,3600 against the US dollar (USD) at the beginning of the week, in the middle of the holidays in the United Kingdom (UK) and the United States markets (US) due to the spring banking day and the day of the fallen, respectively. The GBP/USD torque, which is quoted around 1,3567 at the time of writing this article on Monday, has extended the rise as the US dollar slides even more after the “constantly changing fees ads” of US President Donald Trump about imports of the European Union (EU) have renewed concerns about their appeal as a safe refuge.
The American dollar index (DXY), which tracks the value of the dollar against six main currencies, falls to about 98.70, the lowest level seen in a month.
During the weekend, Trump suspended the 50% tariffs to the EU until July 9, which was expected to enter into force on June 1. His decision occurred after conversations with the president of the European Commission, Ursula von der Leyen. “We had a very pleasant call, and I agreed to move it,” Trump said and added: “She said we will meet quickly and see if we can reach an agreement,” Reuters said.
On Friday, the US president imposed 50% tariffs on imports from the old continent after Brussels sent a commercial proposal not very good to Washington.
The US Treasury Secretary, Scott Besent, also warned that the EU “is not negotiating in good faith” in an interview with Fox News.
What moves the market today: the sterling pound wins as the operators reassess the moderate bets of the BOE
- The sterling pound earns against the US dollar, since the latter suffers from Washington’s erratic ads about its tariff policies. Although President Trump’s decision to postpone additional import tariffs has provided relief to European and American markets, investors continue to doubt the credibility of the dollar. During European negotiation hours, S&P 500 futures are up to 1%.
- Another reason behind the weakness of the US dollar is Trump’s threat of a 25% tariff to Apple and other smartphone manufacturers for not manufacturing in the US in the US. Investors see the event as an attack of the administration to the autonomy of the private sector, which could affect business confidence.
- Meanwhile, Federal Reserve officials (FED) continue to warn about the possible risks of staggration following the new economic policies announced by Washington. “There is no doubt that the shock of the tariffs is stagging,” said the president of the Federal Reserve of Minneapolis, Neel Kashkari, in an interview with Bloomberg TV earlier in the day. Kashkari indicated that any monetary policy adjustment is unlikely, at least before September, since officials seek more clarity on how new policies will influence economic perspectives. “Uncertainty is something that is in the mind of the FED and American companies, and we are trying to navigate where inflation and labor market are going,” he added.
- Meanwhile, libra sterling is also surpassing its other peers, except antipodeans, during European negotiation hours on Monday. The British currency wins as the participants of the financial market reassess the expectations of the monetary policy of the Bank of England (BOE) after the publication of a stronger growth than projected in the consumer price index (CPI) of the United Kingdom and the Aprilist sales data in April.
- Last week, the United Kingdom IPC report showed that general inflation rose at a robust rate of 3.5% year -on -year compared to the growth of 2.6% observed in April. In the same period, inflation in the services sector, which is closely followed by BOE officials, accelerated to 5.4% since the previous publication of 4.7%. Meanwhile, retail sales grew strongly 1.2% intermensual, compared to estimates of 0.2% and a growth of 0.1% observed in March. Theoretically, high inflation and strong retail sales data discourage BOE officials to reduce interest rates, a scenario that is favorable for sterling pound.
- According to a Reuters report, the futures market shows that operators see rates from the United Kingdom falling around 38 basic points (PBS) by the end of this year, which would imply a 25 -page interest rate cut and a probability of approximately 50/50 of a second cut.
Technical analysis: The pound sterling jumps about 1,3600
The sterling pound records a new three years around 1,3600 against the US dollar on Monday. The short -term trend of the GBP/USD torque remains bullish, since all exponential mobile socks (EMA) in the short and long term are upward.
The 14 -day relative force index (RSI) rises about 67.00, indicating a strong bullish impulse.
On the positive side, the maximum of January 13, 2022 of 1,3750 will be a key obstacle to the pair. Looking down, the maximum of April 28, 1,3445 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.
