The sterling pound is stabilized while the Minister of Economy of the United Kingdom confirms that it will remain in office

  • The sterling pound recovers the composure while the Minister of Economy of the United Kingdom, Rachel Reeves, rules out speculation about her resignation.
  • The new signing bill of the United Kingdom is expected to lead to an increase in taxes or spending cuts.
  • The US dollar has a lower yield as the Trump tariff period expires on July 9.

The sterling pound (GBP) is negatively negatively negotiated against its peers on Friday, after the commitment of the Treasury Chancellor of the United Kingdom, Rachel Reeves, of remaining in his position until the next elections. The British currency has had a lower performance than its peers this week due to the speculation about the resignation of Reeves for not complying with its own fiscal rules.

On Thursday, Reeves confirmed when talking to journalists who will remain in office despite the winds against prosecutors, and expressed confidence that he will improve fiscal conditions during his mandate. That same day, a spokesman also confirmed on behalf of the United Kingdom Prime Minister Keir Starmer, which “she [Reeves] He doesn’t go anywhere. “

The speculation about the role of Reeves as Chancellor arose after she was crying in the House of Commons earlier this week for taking a 180 degree turn in her fiscal rules and the PM Starmer refrained from answering the question of the conservative leader KEMI Badenoch about whether she will continue in her position. This led to an abrupt increase in the yields of the United Kingdom bonds, which weighed strongly over the sterling pound.

Foreign Minister Reeves broke her own fiscal rules after increasing the standard allocation for universal credit (UC) in the new well -being bill. To compensate for its cost, you would need to cut the expense or increase taxes. “Of course, there is a cost for the changes in the well -being that Parliament approved this week and will be reflected in the budget,” said Reeves, the BBC reported.

What moves the market today: the pound sterling progresses against the US dollar as the tariff period is approaching

  • The sterling pound rises to about 1,3680 against the US dollar (USD) on Friday, in a festive atmosphere due to independence day in the United States (USA). The GBP/USD pair advances as the US dollar has a lower performance than its peers, with the term of July 9 stalking. The US dollar index (DXY) falls below 97.00 at the time of writing in the European session.
  • The US dollar has a lower yield since the US president, Donald Trump, declared that he will send letters to those nations with which a commercial agreement has not been completed, outlining tariff rates. Until now, Washington has announced trade agreements with the United Kingdom and Vietnam, and a framework with China. Trump has also expressed confidence that he will reach an agreement with India before the tariff period.
  • The imposition of reciprocal tariffs by the US to its main commercial partners, such as the Eurozone, Japan, Canada and Mexico, will affect the stability of global trade.
  • Meanwhile, the authorization to impose the “One Big Beautiful Bill” of Trump, after it was approved by little by the House of Representatives controlled by the Republicans, has increased the fiscal risks of the USA. Market experts believe that their emblematic bill will increase the national debt by 3-3.4 billion dollars in the next decade. Such scenario will increase the obligations of interest to the administration and will be inflationary to the economy.
  • Another reason behind the weakness of the US dollar is the deceleration in the hiring of the private sector. The US Non -Agricultural Payroll (NFP) report showed on Thursday that the strong hiring in the public sector contributed significantly to robust employment data. In general, the workers added in June were 147K, of which 74K were private and others from the government.
  • The hiring in the private sector was almost half of the 137K registered in May and well below if compared to the average of three months of 115k, which points to a hesitation in the midst of uncertainty around the tariff policy.
  • The weak contracting by private employers will probably force Federal Reserve (FED) officials to consider cuts in interest rates sooner.

Technical Analysis: The sterling pound maintains the 20 -day EMA key

The sterling pound is negotiated slightly higher, about 1,3675 against the US dollar on Friday. The 20 -day exponential (EMA) mobile average about 1,3600 continues to act as an important support zone for the GBP/USD.

The 14 -day relative force (RSI) index falls below 60, suggesting that the bullish impulse has vanished. However, bullish bias remains intact.

Looking down, the psychological level of 1,3500 will act as a key support zone. On the positive side, the maximum of three and a half years around 1,3800 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

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