- The sterling pound falls below 1,3300 against the US dollar while the latter extends its recovery despite the fact that the GDP data from the first US trimester show an economic contraction.
- The commercial uncertainty between the US and China will probably keep investors on alert, since the US manufacturing PMI could hint an early impact of Trump’s tariff policy.
- BOE officials emphasize the need to discount the risk of commercial war in monetary policy decisions.
The pound sterling (GBP) corrects even more, quoting slightly below 1,3300 against the US dollar (USD) during the European negotiation hours on Thursday, extending the fall from its maximum of three years of 1,3445 registered on Tuesday. The GBP/USD torque faces sales pressure as the US dollar (USD) extends its two -day recovery, a movement that suggests that the fears of a global disruption due to the imposition of additional tariffs by the president of the US, Donald Trump, have reached their maximum point.
The American dollar index (DXY), which tracks the value of the dollar against six main currencies, reviews the maximum biweekly around 100.00.
The White House has indicated that it could announce bilateral trade agreements with several commercial partners in weeks. “The initial commercial agreements will be announced in weeks, not in months“The US trade representative, Jamieson Greer, said Fox News, according to Reuters. However, he denied any commercial discussion with China, which remains a concern for market participants, given the dependence of the American industries of the imports of the Asian giant.
The publication of the data of the Gross Domestic Product (GDP) of the First Quarter of the USA on Wednesday has also backed the US dollar. The data showed that the US economy contracted in the first quarter of the year at an annualized rate of 0.3%, mainly due to a substantial increase in imports. American importers advanced supplies from their foreign suppliers to escape the load of tariffs higher taxes by President Trump on April 2.
In Thursday’s session, investors will focus on the final data of the Purchase Management Index (PMI) of Global S&P manufacturing and the ISM for April. Investors will pay special attention to the paid prices of the ISM manufacturing PMI to know if the impact of Trump’s protectionist policies has begun to be reflected in input costs.
Last week, the preliminary report of the Global S&P PMI already said that tariffs are causing companies to “increase their sales prices at a rate not seen in more than a year.” The agency warned that these higher prices “will inevitably translate into greater inflation for consumers, potentially limiting the margin so that the Federal Reserve (FED) reduces interest rates at a time when an economy in deceleration seems to need an impulse.”
Daily summary of the market movements: the sterling pound yields below its peers
- The sterling pound collapses in front of its main peers, except the Japanese yen (JPY), on Thursday in the European session. The British currency decreases in the midst of fears that global commercial war harm the economic perspectives of the United Kingdom (UK).
- There is a great possibility that the United Kingdom has a commercial agreement with Washington, and the impact of Donald Trump’s reciprocal tariff commercials to sell their products in other territories at lower prices.
- The officials of the Bank of England (BOE), including Governor Andrew Bailey, have warned that the Central Bank should consider the risk of global commercial war on the repercussions of Trump’s tariffs. “We must take the risk for growth very seriously,” Bailey said last week. Separately, the Vice Governor of the BOE, Clare Lombardelli, expressed concern about the uncertainty of commercial policy and emphasized that it is “prudent” to consider the “persistent risks” by making monetary policy decisions, according to Bloomberg.
- The growing global economic uncertainty has forced operators to increase bets in favor of the BOE cutting interest rates at the May 8 policy meeting. The BOE is almost certain that it will reduce interest rates at 25 basic points (PBS) to 4.25%.
Technical Analysis: Esterlina Libra falls about 1,3300
The sterling pound recedes about 1,3300 against the US dollar from the maximum of three years of 1,3445. However, the general perspective of the torque remains bullish, since all long -term exponential mobile socks (EMA) are inclined to rise.
The 14-day relative force (RSI) index falls within the range of 40.00-60.00, indicating that the bullish impulse has ended for now. However, rising bias still prevails.
On the positive side, the round level of 1,3600 will be a key obstacle to the torque. Looking down, the maximum of April 3 around 1,3200 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.
