- The sterling pound advances in front of its main peers on Thursday after the publication of GDP data from the United Kingdom better than expected.
- Manufacturing and industrial production decreased at a faster rate in monthly terms in March.
- Investors expect Powell’s speech from the Fed to obtain new orientations on interest rates.
The sterling pound (GBP) attracts offers in front of its peers in European negotiation hours on Thursday after the publication of the data of the Gross Domestic Product (GDP) of the United Kingdom. The National Statistics Office (ONS) reported that the economy grew at a robust rate of 0.7% in the period from January to March, compared to 0.6% estimates. The economy barely expanded in the last quarter of 2024.
Intended, the preliminary growth of the GDP of the United Kingdom reached 1.3% in the first quarter, slightly above 1.2% expectations but slower than the previous publication of 1.5%. In March, the economy of the United Kingdom expanded 0.2%, while economists anticipated flat yield after 0.5% growth in February.
The greatest GDP growth of the United Kingdom reflects strong economic health, which decreases the hopes of cuts in interest rates by the Bank of England (BOE) and is positive for sterling pound.
On Wednesday, the member of the Monetary Policy Committee (MPC) of the BOE, Catherine Mann, commented in an interview with CNBC that monetary policy should remain at its current levels due to the upward risks of inflation and solid conditions of the labor market, Reuters reported. Mann declared that the labor market is strong despite the fact that the employment data for the quarter that ended in March showed a slower growth on Employment on Tuesday. “The first observation is that the labor market has been more resistant. Now, yes, we have had some data that are indicative of a deceleration labor market, but it is not a non -linear adjustment,” said Mann.
Meanwhile, the manufacturing and industrial production data of the United Kingdom for March have been weaker than expected. The manufacturing and industrial production data month by month decreased by 0.8%and 0.7%, respectively, while both were expected to contain 0.5%.
What moves the market today: the sterling pound exceeds the US dollar before Powell’s speech
- The pound sterling jumps to about 1,3300 against the US dollar in European negotiation hours. The GBP/USD torque wins as the US dollar quotes down before the speech of the president of the Federal Reserve (Fed), Jerome Powell, and US economic data in the North American session. Investors will pay close attention to Powell’s speech to obtain clues about any change in the Fed position regarding monetary policy perspectives after publication of the data of the April Consumer Price Index (CPI), which were softer than expected, and a 90 -day commercial truce between the US and China.
- On Wednesday, the vice president of the FED, Philip Jefferson, declared in his comments prepared in an event of the Fed in New York that the current policy is “moderately restrictive”, adding that it is “well positioned” in the midst of the high uncertainty about how the new economic policies of US President Donald Trump will shape the economic perspectives and inflation.
- Jefferson celebrated the last softer IPC report, but warned about uncertainty around the future path of inflation following the tariffs imposed by Washington. “If tariff increases announced so far are maintained, they are likely to interrupt progress in deflation and generate at least a temporary increase in inflation,” he said.
- According to the CME Fedwatch tool, the FED is unlikely to reduce interest rates before the September policy meeting. The tool also suggests that the Central Bank would cut interest rates twice this year.
- In the economic data front, the April Price Index (IPP) of April is expected to show that US business owners increased the prices of goods and services at a moderate rate. It is estimated that the US General IPP has grown a 2.5% year -on -year, slower than the reading of March 2.7%. In the same period, the underlying IPP is expected to exclude volatile food and energy prices – has increased at a slower pace of 3.1% compared to the previous publication of 3.3%. Meanwhile, retail sales data, a key measure of consumer spending, are stable in April compared to the robust increase of 1.5% in March.
- On Monday, the US and China avoided the commercial war for 90 days after both agreed to reduce tariffs by 115% and expressed confidence in reaching an agreement soon.
Technical Analysis: The sterling pound rises to about 1,3300
The sterling pound rises to about 1,3300 against the US dollar on Thursday. The GBP/USD torque is maintained above the 20 -day exponential (EMA) mobile average, which quotes around 1,3256, suggesting that the short -term trend is upward.
The 14-day relative force (RSI) index oscillates within the range of 40.00-60.00. A new bullish impulse would appear if the RSI exceeds 60.00.
On the positive side, the maximum of three years of 1,3445 will be a key obstacle to the torque. Looking down, the psychological level of 1.3000 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.
