- The pound sterling quotes in a range adjusted around 1,3440 against the US dollar, with investors waiting for new developments over US tariffs.
- The operators reduce the moderate bets of the Fed, after the US CPI data for June.
- It is unlikely that the BOE cuts interest rates at the September meeting.
The sterling pound (GBP) calmly quotes around 1,3440 against the US dollar (USD) during the European negotiation session on Monday. The GBP/USD is consolidated while the US dollar (USD) remains in general stable, with investors waiting for developments on tariffs imposed by the United States (USA) to its commercial partners before the deadline of August 1.
At the time of writing, the American dollar index (DXY), which tracks the value of the dollar against six main currencies, marginally lowers about 98.35. However, it remains close to the maximum of four weeks of around 99.00 established last week.
Until now, the US has announced trade agreements with the United Kingdom (UK), Vietnam and Indonesia, and a limited pact with China. Washington has also expressed confidence that he is close to signing a commercial agreement with India. US President Donald Trump has announced tariffs at 22 nations, notably Japan, Vietnam, Canada, Mexico and the European Union (EU).
Meanwhile, commercial tensions between the US and the EU have climbed, since the former has demanded a higher base tariff on the imports of the commercial block. According to a Financial Times report (FT), Washington is considering at least a minimum tariff of 15% to 20% in an agreement with the Eurozone.
The report has also shown that President Trump has been reluctant to reduce tariffs on EU cars imports, which are placed in 25%. Commercial tensions between the US and the EU could be unfavorable for global commercial flows, given the magnitude of business between both economies.
What moves the market today: sterling pound rises slightly in front of its peers
- The sterling pound begins the week with a slightly positive tone. The British currency goes up as market experts have reduced bets that support a greater number of interest rate cuts by the Bank of England (BOE) for the rest of the year.
- According to a Reuters report, several Wall Street brokerage houses have reevaluated their expectations of BOE features, after the publication of the data of the consumer price index (CPI) of the United Kingdom (UK) for June, which were higher than projected, and the lower weakness of what was expected in the labor market data for the three months that ended in May.
- Bank of America (Bofa) Analysts Global Research, Citigroup, Morgan Stanley and Goldman Sachs reduced the expectations of a BOE interest rate cut in September on September on Thursday. Citigroup expects the Central Bank to cut interest rates in August, November and December.
- Last week, the United Kingdom IPC report showed that inflationary pressures grew at a faster rate than expected. The general and underlying CPI of the United Kingdom increased 3.6% and 3.7% year -on -year, respectively. Meanwhile, labor market data showed that the decrease in the number of employees, who are already on payroll, was less than what seemed in previous readings. According to the Employment Report, the number of dismissed workers was checked down 25K from previous 109K estimates.
- This week, investors will pay special attention to the preliminary data of the purchasing managers index (PMI) of the United Kingdom S&P for July and the retail sales data for June, which will be published on Thursday and Friday, respectively.
- In the US, the operators have reduced moderate bets of the Federal Reserve (FED) for the September meeting. According to the CME Fedwatch tool, the probability that the FED reduces interest rates at the September meeting has decreased to 58.5% from almost 70% seen a month ago.
- The operators cut the expectations that the FED reduces interest rates at the September meeting after the publication of US CPI data for June last week, which showed that the prices of products that are largely imported have increased after the imposition of sectoral tariffs by President Donald Trump.
Technical analysis: The sterling pound oscillates around 1,3440
The sterling pound oscillates within Friday’s range around 1,3440 against the US dollar on Monday. The short -term trend of the GBP/USD torque is bassist, since it lies below the exponential mobile socks (EMA) of 20 days and 50 days, which are located around 1,3510 and 1,3470, respectively.
The 14 -day relative force (RSI) index strives to stay above 40.00 level. A new bearish impulse would arise if the RSI falls below that level.
Looking down, the minimum of May 12, 1,3140 will act as a key support zone. On the positive side, the maximum of July 11 around 1,3585 will act as a key barrier.
LIBRA ESTERLINA – FREQUENTLY QUESTIONS
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.
