- GBP/JPY remains under mighty sales pressure and transactions under 196.00 on Wednesday.
- UK Gilt Seloff weighs a pound of Szterling.
- The Prime Minister of Great Britain Keir Starmer refused to confirm that the finance minister Rachel Reeves would remain in her position.
Pound Sterling remains under huge sales pressure on Wednesday, because the markets evaluate the latest political events in Great Britain. During the GBP/JPy press, it has been trading at the lowest level for two weeks near 195.50, losing 0.8% per day.
The British finance minister Rachel Reeves seemed clearly nervous during PMQ on Wednesday after Prime Minister Keir Starmer refused to guarantee that he would remain in his position until the next election. This development caused a sale in government bonds in Great Britain, and the profitability of a 10-year reference increased by more than 4% on the highest level from June.
Although Starmer’s press secretary later said that Reeves had the full support of the prime minister, the markets largely ignored this comment. “The Chancellor is not going anywhere, he has the full support of the prime minister,” the press secretary told journalists.
Reflecting the wide weakness of GBP, EUR/GBP has recently increased by almost 1% on above 0.8650, while GBP/USD has fallen by over 1% nearly 1.3600.
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 crucial 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 affordable 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 delicate, 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.
