The sterling pound goes up while investors digest the risks of stagflation in the United Kingdom

• The sterling pound rises in front of its main peers despite the growing risks of stagflation in the economy of the United Kingdom.
• The yields of the United Kingdom bonds fall before the firm moderate bets of the BOE.
• The risk premium in the US dollar has decreased while investors digest Trump’s tariff fears.

The sterling pound (GBP) wins against its main peers at the beginning of the week. The British currency goes up despite the fact that investors are concerned about the growing risks of stagflation in the United Kingdom economy (UK). The Global S&P of the United Kingdom S&P (PMI) index report showed that employment levels foured for the fourth consecutive month and cost pressures accelerated in the private sector, a scenario that leads to greater inflation As producers transfer the impact of the highest input costs to customers.

A deceleration in labor demand seems to be the result of the announcement of the Foreign Minister of the Exchequer Rachel Reeves of increasing the contribution of employers to the National Insurance (Ni).

The first indicators of business conditions in 2025 are added to pessimism about the economy of the United Kingdom, with companies cutting employment amid the fall of sales and concerns about business perspectives. Meanwhile, inflationary pressures have been revived, aiming at a stagging environment, said Chris Williamson, head economist of Business on S&P Global Market Intelligence.

The deterioration of labor market conditions and the increase in price pressures are expected to add more problems for the Bank of England (BOE), which plans to announce its first monetary policy of 2025 on February 6. Operators are confident that the BOE will reduce interest rates by 25 basic points (PB) to 4.5%.

Meanwhile, the firm moderate bets of the BOE have also weighed on the yields of the United Kingdom bonds to 30 years, which fell more than 1% to about 5.15% on Monday.

Daily Markets Summary: The sterling pound exceeds the US dollar

• The Esterlina pound recovers all intradic losses and rises about 1,2500 against the US dollar (USD) in the European session on Monday. The GBP/Usd pair bounces while the US dollar goes back after investors digest fears that the president of the United States (USA), Donald Trump, imposes 25% tariffs on Colombia during the night.
• During the weekend, President Trump threatened to impose tariffs on his South American trade partner for not allowing military flights that transported illegal immigrants in his territory. Later, Trump suspended the tariffs proposed after Colombia accepted its terms.
• The US dollar index (DXY), which follows the value of the dollar against six main currencies, falls about 107.50 from an intradic maximum of 107.80. The dollar lost its risk premium since market participants expected President Trump to use tariffs only to negotiate agreements.
• “This seems to feed the growing sensation that Trump is fulfilling less in protectionism compared to the comments prior to the inauguration, and that, ultimately, some of those tariff threats may not materialize as long as some concessions in trade are made, “said ing.
• Looking ahead, the main trigger for the US dollar this week will be the monetary policy decision of the Federal Reserve (FED), which will be announced on Wednesday. It is almost certain that the Fed will maintain interest rates without changes in the range of 4.25%-4.50%. Investors will pay close attention to the press conference of the president of the FED, Jerome Powell, after the decision of the interest rate, who is expected to face the question of whether the Fed will positively react to Trump’s call for immediate cuts from rates

Technical Analysis: The sterling pound is maintained above the 20 -day EMA

The sterling pound reviews the psychological resistance of 1,2500 against the US dollar. The short -term perspective of the GBP/USD torque remains firm since it remains in the 20 -day exponential (EMA) mobile average, which quotes around 1,2380.

The 14-day relative force index (RSI) rises above 50.00 from the range of 20.00-40.00, suggesting that the bassist impulse has ended, at least for now.

Looking down, the minimum of January 13, 1,2100 and the minimum of October 2023 of 1,2050 will act as key support zones for the torque. Upwards, the maximum of December 30, 1,2607 will act as a key resistance.