- The sterling pound surpasses most of its peers after the encouraging employment data of the United Kingdom for the three months that end in February.
- Investors expect the UK CPI data for March, which will be published on Wednesday.
- The president of the United States Trump will probably announce a temporary suspension of cars tariffs.
The sterling pound (GBP) advances in front of its main peers, except antipodeans, on Tuesday after the publication of the United Kingdom labor market data for the three months that end in February. The National Statistics Office (ONS) reported that the economy added 206K new workers, significantly more than the 144K registered in the three months that ended in January.
The agency reported that the ILO unemployment rate was aligned with the estimates and the previous publication of 4.4%. The Employment Data scenario is favorable for the British currency. However, the participants of the financial market expect employers to slow down their hiring process due to an increase in contributions to social security schemes that will begin in April.
In the autumn budget, the Minister of Finance of the United Kingdom, RECHE Reeves, increased the contribution of employers to the National Insurance (NI) from 13.8% to 15%.
Meanwhile, the average gains excluding bonuses, a key measure of salary growth, grew at a slightly slower pace of 5.9% compared to estimates of 6%. In the three months that ended in January, the salary growth measure increased by 5.8%, decreased down from 5.9%. The average profits including bonuses constantly increased 5.6%, but slower than the expectations of 5.7%.
Mixed average gains data are unlikely to change market expectations on the monetary policy of the Bank of England (BOE) significantly, which indicates that the Central Bank could cut interest rates at the May policy meeting.
To obtain new clues about interest rates, investors will focus on consumer price index (CPI) of the United Kingdom for March, which will be published on Wednesday. Economists expect the UK IPC of the UK – which excludes volatile food and energy prices – has grown at a constant pace of 3.5%.
What moves the market today: the sterling pound reaches a new six months against the US dollar
- The sterling pound reaches a new maximum of six months about 1,3220 during European negotiation hours on Tuesday. The GBP/USD torque signs firmly while the US dollar is still under pressure, with investors losing confidence in its structural appeal due to changing decisions about commercial policies of the US president, Donald Trump. The dollar (DXY) index, which tracks the value of the dollar against six main currencies, operates with caution slightly above the minimum of three years of 99.00.
- The constantly changing tariff holders of President Trump, from the 90 -day break in reciprocal tariffs to all their commercial partners, except China, to signals of temporary suspension of additional taxes on imported vehicles, have forced merchants to reassess the attractiveness of a safe refuge of the US dollar.
- On Monday, Donald Trump indicated that he is exploring temporary exemptions for tariffs on imported vehicles and related parts, since national equipment manufacturers (OEM) need more time to establish home manufacturing facilities. “I am looking for something to help automotive companies with that,” Trump said and added, “they are changing to parts that were manufactured in Canada, Mexico and other places, and they need a little time, because they will do them here,” Bloomberg said.
- Meanwhile, the economic risks caused by Trump’s policies have stopped the need for interest rate cuts by the Federal Reserve (Fed). On Monday, the governor of the Fed, Christopher Waller, supported the relief of monetary policy on the stage of an economic recession despite the fact that inflationary pressures remain high. “I hope that the risk of recession exceeds the risk of increasing inflation, especially if the effects of tariffs on increasing inflation are expected to be short -lived,” Waller said.
Technical analysis: The sterling pound extends its winning streak
The sterling pound extends its winning streak for the sixth day of negotiation and jumps above 1,3200 against the US dollar (USD) at the time of writing on Tuesday. The short -term perspective of the torque is optimistic since all long -term exponential mobile means (EMA) are inclined to rise below the current price.
The 14 -day relative force index (RSI) shows a V -form recovery from 40.00 to 65.00, suggesting a strong bullish impulse.
Looking down, the fibonacci setback of 61.8% drawn from the maximum of the end of September to the minimum of mid -January, about 1,2927, will act as a key support zone for the torque. On the positive side, the maximum of three years of 1,3430 will act as 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
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.
