Pound Sterling strengthens the CPI in the UK

The Sterling pound gains on the main peers on Monday before the potential trade agreement between Great Britain and the EU later on the same day.
The command of Moody by the American credit evaluation sovereignly battered the American dollar.
According to analysts, the FED will not reduce interest rates this year.

The pound of sterling (GBP) trads higher in relation to the main peers at the beginning of the week. The British currency is ahead of the Union (EU) commercial summit from the European Union (EU) in London in London on Monday. Investors will pay special attention to a potential trade agreement, because this will strengthen the economic ties between the economies since Brexit’s announcement.

According to the comments of the Chief of Trade Policy in the British Chamber of Commerce William Bain, during a session hosted by Jefferies at the weekend, a potential agreement between Great Britain and the EU would bring various British industries, such as defense, agriculture and energy. Bain stated that the non -binding defense pact would unlock activities worth EUR 150 billion for British weapons suppliers. The agreement between European hosts is also aimed at removing non -disgust barriers in the agricultural industry.

Over the past week, the British currency has achieved firmly on the positive Great Britain Gross domestic product (GDP) Report. The data showed on Thursday that the economy expanded at a solid pace by 0.7% in the first quarter of the year.

This week, investors will pay attention to the given consumer price indicators in the UK (CPI) in April to obtain recent tips on the Bank of England (Boe) monetary policy forecast, which will be published on Wednesday. The data is expected to show that the basic CPI – which excludes unstable ingredients of food, energy, alcohol and tobacco – is to escalate at a faster rate of 3.6%, compared to the earlier issue of 3.4%.

Daily Digest Market Movers: Pun Sterling exceeds the American dollar for an American loan reduction

The Sterling pound jumps to almost 1.3400 compared to the American dollar (USD) in the Monday session of North America. The GBP/USD pair strengthens when the American dollar faces sales pressure after Moody’s Rating reduced the credit assessment of the United States (USA) from AAA to AA1 on Friday after lasting fiscal deterioration. The agency explained, however, that a reduction in one amount does not indicate that her confidence in the US administrative and federal framework (FED) has decreased.
The American dollar index (DXY), which assesses the value of Greenback compared to the six main currencies, will drop to almost 100.40.
The Greenback perspective improved due to the positive response of US President Donald Trump in an interview with Fox News on Friday about a visit to China for direct trade talks with the Chinese president XI Jinping. Trump’s affirmation to visit China fuels hopes for a potential trade agreement between Washington and Beijing, a script that will further reduce the risk of global economic confusion.
Another reason for improving the perspective of the American dollar is the growing expectation that Fed In the near future it will not reduce interest rates, despite the lowering of the White House tariffs from what they announced at the beginning of April.
The report of the leading company dealing with investment banking Morgan Stanley showed that the FED will rather not reduce interest rates before March 2026. “De-suction significantly reduces the risk of heavy stopping of commercial flows, and the risk of short-term recession in the economy,” said economists in Morgan Stanley, but they warn about “the vowent increase in inflation, because they are High. “
According to the CME Fedwatch tool, the Fed should reduce interest rates twice this year, from the September meeting.
Meanwhile, the annual expectations of consumers inflation further accelerated due to the falling of the tariffs by the US President Trump. The University of Michigan (UOM) showed on Friday that the expectations of flash consumers inflation increased to 7.3% compared to the previous release of 6.5% – a key trigger that would stop the Fed from reducing interest rates from current levels.

Technical analysis: pound sterling is aimed at breaking over 1.3400

Pound Szterling climbs nearly 1.3390 against American dollar on Monday. The GBP/USD pair is located above the 20-day interpretation average (EMA), which trads around 1.3270, which suggests that the short-term trend is stubborn.

The 14-day relative strength indicator (RSI) indicates up in the range of 40.00-60.00. Freshly stubborn shoots would appear if the RSI break above 60.00.

On the other hand, a three -year maximum of 1,3445 will be a key obstacle to the couple. Looking down, the 1.3000 psychological level will act as the main area of support.

FAQ in American dollars

The American dollar (USD) is the official currency of the United States of America and the “de facto” currency of a significant number of other countries where it is in circulation with local notes. It is most often a commercial currency in the world, which is over 88% of all global currency turnover, i.e. an average of $ 6.6 trillion of transactions per day, according to the data from 2022. After the Second World War, USD took over from the British pound as the reserve currency of the world. For most of its history, the American dollar was supported by gold, up to the Bretton Woods agreement in 1971, when the golden standard disappeared.

The most significant single factor affecting the value of the American dollar is the monetary policy, which is shaped by the Federal Reserve (FED). The Fed has two seats: achieving price stability (control inflation) and supporting full employment. Its main tool to achieve these two goals is to adjust interest rates. When the prices rise too quickly and inflation is above 2% of the Fed target, the FED will escalate the rates, which helps USD values. When inflation drops below 2% or the unemployment rate is too high, the Fed may reduce interest rates that are weighing in the green area.

In extreme situations, the Federal Reserve can also print more dollars and introduce quantitative alleviation (QE). QE is a process in which the Fed significantly increases the credit flow in the detained financial system. It is a non -standard policy measure used in the event of a loan arid, because the banks will not borrow (for fear of the contractor). This is the last last, when just lowering interest rates is unlikely to achieve the necessary result. The weapon of choosing the Fed was a FED weapon to combat the credit crisis, which took place during the great financial crisis in 2008. This includes FED printing more dollars and using them to buy US government bonds mainly from financial institutions. QE usually leads to a weaker American dollar.

Quantitative twist (QT) is the opposite process in which the federal reserve stops buying bonds from financial institutions and does not reinvest from the bonds that it has in recent purchases. This is usually positive for the American dollar.