- GBP/USD attracts several buyers to around 1.3350 in Monday early Asian session.
- The United Kingdom hopes to conclude a contract with Trump after he imposed 10% of tariffs on most of British goods to the USA.
- Powell Fed said that the American central bank is in waiting and seeing mode.
The GBP/USD pair extends their position to almost 1.3350 during the early Asian session on Monday. Moving the main pair is strengthened by a pliable American dollar (USD), because traders are becoming more and more confident that US President’s economic policy will lead the economy to the recession.
The Prime Minister of Great Britain Keir Starmer and US President Donald Trump talked about “ongoing and productive” commercial conversations in their first call, since Trump imposed tariffs on goods in Great Britain. According to the Downing Street official, Starmer emphasized his commitment to “free and open trade and the importance of protecting the national interest.”
Starmer tries to reach an agreement with the USA after Trump announced a 10% tariff for goods in Great Britain and a 25% rate for car imports, steel and aluminum. Meanwhile, Optimism related to US-UK commercial talks is still the basis of GBP against Greenback in the near future.
Nevertheless, hawks from the American Federal Reserve (FED) can raise USD and limit the position for the main couple. Jerome Powell, chairman of the FED, said last week that escalation tariffs could fuel inflation, while undermining the growth, complicating the path of the percentage of the interest rate. Powell noticed: “For now, we are able to wait for greater clarity before considering any adaptations to our political position.”
Pound sterling faq
The Sterling (GBP) pound is the oldest currency in the world (886 ne) and the official currency of Great Britain. According to data 2022, this is the fourth most rotating currency exchange unit (FX), which is 12% of all transactions, an average of $ 630 billion a day. Key commercial pairs are GBP/USD, also known as a “cable”, which is 11%FX, GBP/JPy or “Dragon”, as is known by traders (3%) and EUR/GBP (2%). The Sterling pound is published by Bank of England (Boe).
One most critical factor affecting the value of the pound of Szterling is the monetary policy undertaken by Bank of England. Boe bases his decisions whether he has achieved his main goal of “price stability” – a constant inflation rate of about 2%. Its main tool to achieve this is to adjust the interest rates. When the inflation is too high, Boe will try to restore it, raising interest rates, which makes him more pricey for people and companies. This is generally positive for GBP, because higher interest rates make Great Britain a more attractive place for global investors to park their money. When inflation falls too low, it is a sign that economic growth slows down. In this scenario, Boe will consider reducing interest rates to a budget-friendly loan so that companies borrow more to invest in projects generating growth.
The data release the health of the economy and can affect the value of the pound of Szterling. Indicators such as GDP, PMI production and services and employment can affect the direction of GBP. A mighty economy is good for sterling. It not only attracts more foreign investment, but can encourage Boe to set interest rates, which will directly strengthen GBP. Otherwise, if economic data is frail, the pound of sterling will probably fall.
Another significant issue of data for a pound of Szterling is a commercial balance. This indicator measures the difference between what the country earns on exports and what spends on imports in a given period. If the country produces a highly wanted export, its currency will benefit only from additional demand created by foreign buyers trying to buy these goods. Therefore, a positive net trade balance strengthens currency and vice versa for a negative balance.
