- The libra sterlina drops to about 1,2420 compared to the USD before the US NFP data for January.
- Investors expect the US NFP to drive market expectations about the Fed monetary policy.
- Catherine Mann del Boe surprisingly supported a greater reduction of interest rates of 50 bp.
The sterling pound (GBP) drops to about 1,2420 against the US dollar (USD) in Friday’s European session before non -agricultural payroll data (NFP) of the United States (USA) for January, which will be published At 13:30 GMT. The US dollar index (DXY), which tracks the value of the dollar against six main currencies, rises to about 107.80
Investors will pay close attention to the official US employment data, which is expected .
On Thursday, the president of the Fed de Dallas, Lorie Logan, said that she would support to keep interest rates “for a long time” until the “labor market does not falter” even if inflationary pressures slow down closer to the goal of 2% of the Central Bank.
Last week, the president of the FED, Jerome Powell, also said that the settings of monetary policy will not be appropriate until the Central Bank sees “real progress in inflation or at least some weakness in the labor market.”
The US NFP report is expected to show that the economy added 170,000 workers in January, significantly less than 256,000 in December. It is expected that the unemployment rate will remain stable at 4.1%. Investors will also focus on the average hourly gains data, a key measure of salary growth that drives consumer spending. It is estimated that the salary growth measure has slowed to 3.8% year -on -year from 3.9% in December, with monthly figures growing constantly 0.3%.
Meanwhile, the uncertainty about the tariff agenda of the president of the US, Donald Trump, will also keep investors in suspense. Market participants expect President Trump to point to Europe next to impose tariffs.
Daily digestion of market movements: Libra sterling carily trades while BOE reduces GDP forecasts
- The pound sterling merciless in front of its main peers on Friday after a strong sale on Thursday. Investors sold the British currency the previous day after the Bank of the Bank of England (BOE), in which the Central Bank reduced interest rates at 25 basic points (PB) to 4.5% and reviewed the forecast of the product Gross Interior (GDP) for the year at 0.75%, less than 1.5% projected in November.
- Investors had anticipated a reduction in interest rates of 25 bp, with a division of votes of 8-1, but all officials supported a greater flexibility of monetary policy. However, the remarkable reason behind the strong sale of the sterling pound was the member of the Monetary Policy Committee (MPC), Catherine Mann, a declared defender of a hard policy, joining the official Swati Dhingra and favoring a greater reduction in 50 PB rates. This scenario indicated how much those responsible for monetary policy are concerned about economic perspectives.
- The governor of the BOE, Andrew Bailey, guided a cautious and gradual approach to reduction of fees and warned that, due to the highest prices of energy, inflation could temporarily increase to about 3.7% in the third quarter of the year before Return to the 2%path.
- The decision to cut the interest rates of the BOE is expected to cut a great relief to the Foreign Minister of the United Kingdom, Roche Reeves, since it will stimulate economic growth. Even so, the growth of GDP reviewed down seems to be a call for attention to it. Last week, Reeves was very optimistic about its economic plans, including a new track at Heathrow airport.
Technical Analysis: Libra sterling merciates within the negotiation range of Thursday
The sterling pound ranges from Thursday’s negotiation range against the US dollar on Friday. The GBP/USD PAR perspective remains weak since the 50 -day exponential mobile average (EMA) continues to act as a resistance around 1,2500.
The 14-day relative force (RSI) index oscillates within the range of 40.00-60.00, which suggests a lateral trend.
Looking down, the minimum of January 13, 1,2100 and the minimum of October 2023 of 1,2050 will be key support areas for the torque. Upwards, the maximum of December 30, 1,2607 will act as a key resistance.
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.
