- The Sterling pound improves 1.3550 compared to the American dollar in the hope of a quick US-EU trade agreement.
- Kashkari Fed warns against the risk of staglation under the direction of Trump.
- Traders Pare Boe Dovish focus on a lot of positive economic data in Great Britain.
Pound Sterling (GBP) moves to nearly 1.3540 compared to the American dollar (USD) during Tuesday’s session in North America after correction from a three -year maximum of about 1.3600 published a previous day. The GBP/USD couple decreases when the US dollar reflects with optimism in relation to the United States (USA) and the European Union (EU), which quickly reached a trade agreement.
At the time of writing, American dollar index (DXY), which follows the Greenback value compared to the six main currencies, jumps to nearly 99.35 after attracting offers near the lowest level of 98.70.
In commercial hours in North America, US President Donald Trump wrote in a post about the truth. Social “has been informed that the EU called for a rapid establishment of the dates of the meeting. This is a positive event and I hope that they would do it.”
While the perspectives of the American dollar remain feeble, because investors try to predict how bilateral agreements between the US and its trading partners will shape economic perspectives. Federal reserve officials (FED) predicted that fresh economic policies by US President Donald Trump will lead to the risk of staglation in the economy, and any adaptation of monetary policy would be improper until the scale of inflation growth is expected and the weakness of economic growth will not be expected.
In European commercial hours, the President of the Federal Reserve Minneapolis Neel Kashkari said: “Until there is a greater clarity on the path of the tariffs, their impact on prices and business activity will support the constant maintenance of interest rates. “Kashkari also warned against increased uncertainty due to the rainfall of Washington’s tariffs.”Uncertainty is something that is most important for FED and the USA, and we try to move where inflation and the labor market are going,Kashkari said. He confirmed: “There is no doubt that the tariff shock is staglicy.”
On the economic front, American orders of durable goods in April were much weak. The universal census office announced that the cost of orders received by manufacturers for permanent goods dropped by 6.3% after a significant increase in 7.6% in March. Economists expected that the data would fall significantly by 7.9%.
Daily Digest Market Movers: Pound Sterling Trades higher as salesmen Pare Boe Dovish Bets
- The Sterling pound reflects some strength compared to most main peers on Tuesday, except for the American dollar, because traders are becoming more confident that the series of monetary expansion by Bank of England (Boe) will be moderate than what the central bank led in the political announcement at the beginning of this month.
- According to the Reuters report, the Futures contract market shows that traders see loans falling by about 38 base points (BPS) by the end of this year, which indicates one reduction in interest rates by 25 BPS and about 50% chances for a second.
- The main triggers behind the increase in the trust of traders in relation to the moderate attitude in the field of politics are the solid growth of Great Britain (UK) domestic product Bruthic Product (GDP), hotter than progressive Consumer price indicator (CPI) and optimistic retail sales data in April.
- This month, the National Statistics Office (ONS) announced that the economy increased at a solid pace by 0.7% in the first quarter of the year, the main CPI accelerated at faster pace to 3.5% per year, and retail sales increased by 1.2% in a month.
- At the political meeting, at the beginning of this month, Boe reduced interest rates by 25 BPS to 4.25% with 7-2 votes and led the “gradual and cautious” attitude of interest rates. The chief economist Boe Huw Pill was one of two decision -makers who voted in favor of leaving interest rates at their current level. The pill expressed confidence in the speech in Barclays in London last week that “the disinflation process underlying the underlying process remains intact.” His voting for keeping interest rates was to indicate that the central bank must be careful in terms of foot reductions. “The quarterly tempo of 25 bps seen since last summer is too rapid, taking into account inflation perspectives,” said Pill and added, “” “The pace of quarterly cuts is too rapid, taking into account the risk balance for the price stability we stand. “
The price of the British pound today
The table below shows a percentage change in the British pound (GBP) in relation to the main currencies. The British pound was the strongest against Japanese yen.
| USD | EUR | GBP | JPy | BOOR | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.25% | 0.13% | 1.00% | 0.21% | 0.64% | 0.84% | 0.64% | |
| EUR | -0.25% | -0.14% | 0.70% | -0.05% | 0.30% | 0.48% | 0.36% | |
| GBP | -0.13% | 0.14% | 0.90% | 0.09% | 0.42% | 0.63% | 0.46% | |
| JPy | -1.00% | -0.70% | -0.90% | -0.74% | -0.33% | -0.21% | -0.34% | |
| BOOR | -0.21% | 0.05% | -0.09% | 0.74% | 0.41% | 0.54% | 0.37% | |
| Aud | -0.64% | -0.30% | -0.42% | 0.33% | -0.41% | 0.10% | -0.06% | |
| NZD | -0.84% | -0.48% | -0.63% | 0.21% | -0.54% | -0.10% | -0.20% | |
| CHF | -0.64% | -0.36% | -0.46% | 0.34% | -0.37% | 0.06% | 0.20% |
The heat map shows percentage changes in the main currencies towards each other. The basic currency is collected from the left, and the quote currency is collected from the upper order. For example, if you choose a British pound on the left column and move along the horizontal line to the American dollar, the percentage shift displayed in the field will represent GBP (base)/USD (quote).
Technical analysis: Pound Sterling remains primarily for a short-donated EMA
The Sterling pound improves 1.3550 compared to the American dollar on Tuesday after reaching a fresh three -year maximum day before. Short -term trend Pair GBP/USD It remains stubborn because all low -term interpretation medium movable (EMA) are inclined.
The 14-day relative strength rate (RSI) increases to almost 70.00, which indicates a powerful stubborn momentum.
On the other hand, on January 13, 2022, the highest 1.3750 will be a key obstacle to the couple. Looking down, the highest level of April 28 1.3445 will act as the main support area.
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 vital 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 boost 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 droughty, 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 fresh purchases. This is usually positive for the American dollar.
