- The sterling pound corrects about 1,3550 against the US dollar while the dollar gains ground before the publication of US NFP data for May.
- The US dollar attracted offers after the US President Trump expressed confidence in commercial conversations between the US and China.
- The data of a survey shows that the number of companies in the United Kingdom concerned with US tariffs decreased dramatically after the commercial agreement between the United Kingdom and the US.
The sterling pound (GBP) correctly corrects about 1,3550 against the US dollar during the European negotiation session on Friday, falling from a new three years of 1,3620 registered the previous day. The GBP/USD torque faces sales pressure as the US dollar (USD) gains ground before non -agricultural payroll data (NFP) of the United States (USA) for May, which will be published at 12:30 GMT.
The US dollar index (DXY), which tracks the value of the dollar against six main currencies, rises to about 98.85.
It is expected that official US employment data influence the next movement of the US dollar, since they will probably impact market expectations on the monetary policy perspective of the Federal Reserve (FED). According to estimates, US employers are expected to have hired 130,000 new workers, below the 171,000 added in April. It is expected that the unemployment rate will remain stable at 4.2%.
It is estimated that the average hourly gains data, a key measure of salary growth, have increased 3.7% year -on -year, slower than the 3.8% increase in April. Month by month, salary growth is expected to be 0.3%, faster than the previous reading of 0.2%.
This week, the operators increased the bets that the Fed will cut the interest rates in July after the ADP employment change data and the purchasing managers index (PMI) of the ISM for May showed a weak labor demand and a decrease in economic activity. According to the CME Fedwatch tool, the probability that the Fed drops interest rates at the July meeting has increased to 32.8% since 22.5% of a week ago.
However, in their public speeches, Fed officials still support a waiting approach and see on interest rates, citing upward risks for inflation due to the tariff policy of the US President Donald Trump and the apparent resilience in labor demand.
“I see higher risks for inflation and possible downward risks for employment and production growth,” said Fed governor, Adriana D. Kugler, at the New York economic club on Thursday. He added that labor market seems “resilient and stable”, and economic activity continues to grow, but to a “more moderate rhythm than in the second half of 2024“
The FXSTERET speeches tracker, which measures the tone of the speeches of the FED officials on a moderate to aggressive scale from 0 to 10 using a personalized AI model, described Kugler’s words as aggressive with a score of 6.4. “
Daily summary of the market movements: the sterling pound trades down against its main peers
- The sterling pound runs below its main peers, except in front of the Japanese Yen (JPY), Friday.
- The last survey of the Bank of England (BOE) decision panel shows that the number of companies that cite the US commercial policy as a great concern has decreased. According to the survey, the percentage of companies that cite international risk as one of the three main concerns has been reduced to 12% from 22% observed last month after the commercial agreement between the United Kingdom and the US.
- Commercial tensions between Washington and Beijing have also been relieved by something after a publication of the US president Donald Trump in Truth.Social who confirmed a call with Chinese President Xi Jinping and suggested that trade negotiations between the two nations would advance without problems. “The call lasted about an hour and a half and resulted in a very positive conclusion for both countries,” Trump wrote.
- In the front of monetary policy, operators have reduced bets that support another BOE rates cut this month due to increasing inflation pressures. During the last meeting, when the Central Bank of the United Kingdom cut the rates at 25 basic points to 4.25%, the BOE guided an “gradual and careful” monetary expansion approach.
Technical Analysis: The sterling pound is maintained above the 20 -day EMA key
The sterling pound goes back to about 1,3550 against the US dollar on Friday, staying above the key horizontal support drawn from the maximum of September 26, 1,3434. The perspectives for the pair remain firm since the 20 -day exponential mobile average (EMA) is inclined to rise around 1,3443.
The 14 -day relative force (RSI) index is around 60.00, suggesting that a bullish impulse remains intact.
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.
