The sterling pound weakens while the economy of the United Kingdom contracts in April

• The sterling pound faces a strong selling pressure since the economy of the United Kingdom contracted at a faster rate than projected in April.
• The slower labor demand and economic contraction could encourage BOE officials to consider more cuts in interest rates.
• The US president, Donald Trump, confirms the importation of rare earth from China.

The sterling pound (GBP) faces selling pressure on Thursday, since the United Kingdom National Statistics Office (ONS) reported that the economy contracted at a faster rate than expected in April.

According to the report, the Gross Domestic Product (GDP) of the United Kingdom decreased 0.3% month by month in April, faster than the expectations of 0.1%. In March, the GDP growth rate was 0.2%. The ONS reported that the economy contracted due to a strong decrease in exports to the United States (USA) amid the imposition of tariff policy. “After increasing during each of the previous four months, April saw the largest monthly drop recorded in exports from goods to the United States, with decreases observed in most types of goods, after the recent introduction of tariffs,” the ONS said.

This fall greater than that projected in the country’s economy is expected to force the England Bank officials (BOE) to reassess their “grad and careful” monetary expansion guide, which they delivered in May after cutting the rates of interest in 25 basic points (PBS) to 4.25%.

Meanwhile, factories have also decreased at a faster rate than projected in April. In the month, industrial and manufacturing production contracted 0.6% and 0.9%, respectively.

On Tuesday, employment data for the three months that ended in April also indicated cracks in the labor market. The United Kingdom’s business owners fired a significant number of employees and hired less workers than in the quarter that ended in March, due to an increase in employers’ contributions to social security schemes.

It is expected that the signs of economic shock waves and a softer labor demand to increase the expectations of the market that the BOE will cut interest rates more times than projected last week.

Looking ahead, the main trigger for sterling pound will be the data of the Consumer Price Index (CPI) of the United Kingdom for May and the BOE monetary policy meeting, both scheduled for next week.

What moves the market today: the pound sterling wins against the US dollar

• The sterling pound lies up to 1,3575 against the US dollar during Thursday’s European negotiation hours, despite the fact that GDP data from the United Kingdom for April shows an economic contraction. The GBP/USD pair remains firm since the US dollar does not yield as its peers due to uncertainty around tariff policy.
• On Wednesday, US president, Trump, threatened to send letters to those commercial partners of which Washington has not received any proposal or those who are not negotiating in good faith, establishing commercial terms and tariff fees.
• “At one point, we will simply send letters. And I think they understand that, saying that this is the deal, they can accept or leave it,” Trump told journalists on Wednesday at the Kennedy center and added: “We will send letters in a week and a half to two weeks, telling them what the treatment is.”
• In the commercial front between the US and China, Trump expressed confidence through a publication in Truth. Social that Beijing has agreed to supply rare earth to Washington after the two -day meeting in London earlier this week. “The complete magnets and any rare land necessary will be supplied, in advance, by China. We will also provide China what was agreed, including Chinese students using our universities (which has always been good for me!),” Trump wrote. In addition, he added: “We are obtaining a total of 55% tariffs, China is getting 10%. The relationship is excellent!”
• In the front of the economic calendar, investors expect the data of the US Production Price Index (IPP) for May, which will be published at 12:30 GMT. The IPP report is expected to show that the producer’s inflation grew at a faster rate.

Technical Analysis: The sterling pound strives to revisit the maximum of three years above 1,3600

The Pound sterling Its objective is to review the maximum of more than three years of 1,3617 against the US dollar, which was played on June 5. The GBP/USD torque continues to maintain the 20 -day exponential mobile average (EMA) around 1,3480, which suggests that the short -term trend remains bullish.

The 14 -day relative force (RSI) index strives to break 60.00. A new bullish impulse would arise if the RSI breaks decisively above that level.

On the positive side, the maximum of three years of 1,3617 will be a key obstacle to the pair. Looking down, the minimum of May 15, 1,3258 will act as a key support zone.