- The sterling pound remains close to the minimum of three weeks around 1,3430 against the US dollar.
- Investors hope that US inflation has accelerated, while it is estimated that the United Kingdom IPC has constantly increased in June.
- The feeling of the market remains nervous as commercial tensions between the US and the EU persist.
The sterling pound (GBP) is quoted with caution about the minimum of three weeks around 1,3430 against the US dollar during the European negotiation session on Tuesday. It is expected that the GBP/USD torque will see more volatility in the future, with investors focusing their attention on consumer price index (CPI) of the United States (USA) for June, which will be published at 12:30 GMT.
Before the US inflation data, the US dollar index (DXY), which tracks the value of the dollar against six main currencies, plans traded near the maximum of three weeks around 98.00.
Investors will pay attention to US CPI data, as they will provide clarity on the impact of tariffs imposed by President Donald Trump on inflation. Federal Reserve officials (FED) have been arguing in favor of maintaining interest rates at their current levels until they obtain clarity about how much Trump’s tariff policies will impact on prices, and the publication of the CPI could offer some ideas about it.
Even so, considering the time of the announcement of reciprocal tariffs by President Trump for 22 nations, notably Japan, South Korea, the European Union (EU) and its North American peers, the impact of tariffs will be seen mainly in the figures of the August IPC.
According to estimates, US general inflation increased to 2.7% year -on -year from 2.4% in May. The underlying IPC is expected to exclude volatile food and energy articles, 3%, faster than the previous 2.8%publication. Monthly, both the general and underlying CPI are expected to increase 0.3%.
What moves the market today: the pound sterlina is quoted before a week full of data in the United Kingdom
The pound sterling quite quietly in front of its peers on Tuesday. The British Cotice currency is expected laterally while investors expect the publication of consumer price index (CPI) of the United Kingdom for June and labor market data for the three months that ended in May, which are scheduled for Wednesday and Thursday, respectively.
Economists expect the United Kingdom CPI to have grown at a constant pace of 3.4%, a scenario that should generally lead to the Bank of England (BOE) to maintain stable interest rates, since inflation remains above the 2%target. However, the operators are valuing a reduction of 25 basic points (PBS) in the interest rate by the United Kingdom Central Bank at the August policy meeting, in the midst of growing risks in the labor market and the commercial war.
The United Kingdom employers have slowed their hiring plans to compensate for the impact of an increase in employers’ contributions to social security schemes, who entered into force in April. In the Autumn Declaration, the Treasury Chancellor Rachel Reeves, increased the contribution of employers to the National Insurance (NI) from 13.8% to 15%.
Meanwhile, the National Statistics Office (ONS) is expected to show that the Ilo unemployment rate remained stable at 4.6%, remaining at the highest level from the three months that ended in August 2021.
In the global field, investors seek clarity about commercial conversations between the US and the European Union (EU). President Trump confirmed on Monday that Washington is still in conversations with Brussels to ensure a commercial pact before the deadline of August 1, despite having announced 30% tariffs on EU imports during the weekend. The intensification signals of commercial tensions between the US and the EU would be unfavorable for the riskiest assets, given the high volume of business between both economies.
Technical Analysis: The sterling pound trades below the EMAS of 20 and 50 days
The pound sterling is about a minimum of three weeks around 1,3430 against the US dollar. The short -term trend of the GBP/USD torque has become bassist as it stabilizes below the exponential mobile means (EMAS) of 20 and 50 days, which quote around 1,3558 and 1,3477, respectively.
The 14 -day relative force (RSI) index falls below 40.00. A new bearish impulse would arise if the RSI remains below it.
Looking down, the minimum of June 23, 1,3370 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
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.
