- GBP/USD will start the new week on a positive note amid USD.
- Weak confidence in the American economy continues to influence Pak.
- Fed-Boe’s varying expectations also act as the back wind of the currency pair.
The GBP/USD pair is heading at the beginning of a new week and trading slightly lower than the 1.3100 mark during the Asian session, amazing distance from a swing on Friday. Moreover, the downward feelings surrounding the US dollar (USD) indicate that the less resistant path of instant prices is still in addition to the upward trend.
It was found that the initial market’s reaction to US President Donald Trump’s decision last week to stop stopping the 90 -day definitions, as it was short -term amid increasing concerns about an American recession on the back of the escalating trade war between the United States of China. China’s tariff entered 84 % on American goods on Thursday, while Trump raised his duties on Chinese imports to 145 % unprecedented. Given that the United States is still importing many difficult materials from China, developments weaken confidence in the American economy. This, in turn, has withdrawn the US dollar index (DXY), which tracks Greenback for a basket of currencies, to its lowest level since April 2022 and continues to work as a back force for GBP/USD.
Meanwhile, the data released last week showed that the US Consumer Prices Index (CPI) contracted 0.1 % in March, while the basic consumer price index increased +2.8 % on an annual basis, less than the expectations of consensus. This comes at the top of concerns about the possible economic repercussions of a comprehensive trade war and raises more bets that the Federal Reserve (Fed) will resume the price cutting course soon. In fact, the markets are now pricing 90 basis points of price cuts by the end of this year. On the other hand, investors see a little chance to reduce the interest rate from the Bank of England next month. This, in addition to the marks of stability in the stock markets, it was found that another factor undermines the safe armed armed and supported the lending of the GBP/USD husband.
The main supportive background mentioned above verifies positive expectations in the short term for immediate prices, although the bulls appear hesitant in putting aggressive bets and choosing to wait for important macro versions in the United Kingdom. The decisive monthly job report will be on Tuesday, followed by the latest infection numbers in the consumer on Wednesday. Regardless of this, investors will also face the issuance of monthly retail sales data in the United States and are closely subject to the Federal Reserve’s speech, which will play a major role in influencing dollar price dynamics. This, in turn, must provide some calm motivation for the GBP/USD husband during the last part of the week.
Stering questions and answers to the pound
The British pound (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most trading foreign unit (FX) in the world, as it represents 12 % of all transactions, with an average of 630 billion dollars a day, according to 2022 data.
Their main trading pairs are GBP/USD, also known as “Cable”, which represents 11 % of FX, GBP/JPY, or “dragon” as is known by merchants (3 %), and EUR/GBP (2 %). The pound was released by the Bank of England (Bank of England).
The only most important factor that affects the value of the British pound is the monetary policy decided by the Bank of England. The Bank of England is based on its decisions on whether it has achieved its primary goal of “stability in prices” – a fixed inflation rate of about 2 %. Its primary performance to achieve this is to adjust interest rates.
When inflation is very high, the Bank of England will try to make interest by raising interest rates, making it more expensive for people and companies to reach credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to stop their money.
When inflation decreases significantly, economic growth slows down. In this scenario, the Bank of England will consider reducing interest rates to licensing credit so that companies borrow more to invest in growth generation projects.
Data affects the health of the economy and can affect the value of the pound sterling. Indicators such as gross domestic product, manufacturing, services, and employment can affect the GBP direction.
The strong economy is useful for sterling. Not only attracts more foreign investments, but it may encourage the Bank of England to set interest rates, which will enhance the GBP directly. Otherwise, if the economic data is weak, it is possible that the pound sterling will fall.
Issuing another important data for the British pound is the balance of trade. This indicator measures the difference between what a country gains from its exports and what it spends on imports during a certain period.
If a country produces very desirable exports, its currency will benefit from the additional demand resulting from foreign buyers who seek to buy these goods. Therefore, the positive and positive trade balance enhances the currency and vice versa to achieve a negative balance.
Source: https://www.fxstreet.com/news/gbp-Usd-holds-Teady-near-13100-bulls-have-t-upper-amid- Bearish-USD-202504140037