- GBP/USD softened to around 1.2390 in Monday's Asian session, losing 0.14% of the day.
- Trump said he will announce mutual tariffs in many countries this week.
- Boe's Bailey reiterated that “a progressive and prudent approach to monetary policy remains appropriate.”
The GBP/USD pair will weaken to near 1.239 during Asian trading hours on Monday. The US dollar rises after President Donald Trump promises mutual tariffs. The release of the US Consumer Price Index (CPI) in January will be central to the second half of Wednesday.
Trump said on Friday he would announce mutual tariffs in countries that tax US imports on Tuesday or Wednesday.
Although tariffs on British goods exported to the US may still be on the cards, Trump has said he can “settle” the transaction. Traders will closely monitor developments surrounding tariff policies from Trump. Safe Haven USD.
Expectations for further interest rate cuts by the Bank of England (BOE) could undermine Pound Sterling (GBP). BOE Gov. Andrew Bailey said additional interest rate cuts should be expected, but said, “We will have to judge the meeting by how far and how quickly we meet.” The market is currently priced at an additional 50 basis points (BPS) reduction in 2025.
Pound Sterling FAQ
Pound Sterling (GBP) is the oldest currency in the world (886 AD) and is the official British currency. According to data from 2022, it is the fourth most traded forex (FX) in the world, accounting for 12% of all transactions, with an average daily average of $630 billion. It's there. Its main trading pair is GBP/USD, also known as “cable”. This accounts for 11% of FX, GBP/JPY or “dragon” as is known for traders (3%) and EUR/GBP (2). %). Poundsterling is issued by the Bank of England (BOE).
The only most important factor affecting the value of sterling in the pound is monetary policy determined by the Bank of England. The BOE is based on a decision on whether it has achieved its main goal of “price stability.” This is a stable inflation rate of around 2%. The main tool to achieve this is interest rate adjustments. If inflation is too high, BOE will try to curb it by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP. This is because higher interest rates make the UK a more attractive place for global investors to park their money. If inflation is too low, we can see that economic growth is slowing. In this scenario, the BOE will consider lowering interest rates to make credit cheaper, and consider borrowing more to allow the company to invest in growth projects.
Data assesses economic health and may affect the value of sterling in the pound. Indicators such as GDP, manufacturing and services PMI, and employment can all affect the direction of the GBP. A strong economy is good for Sterling. Not only will it attract more foreign investment, it may also encourage BOEs to raise interest rates. This directly enhances GBP. Otherwise, sterling in the pound could fall if economic data is weak.
Another important data release for Pound Sterling is trade balance. This indicator measures the difference between what a country makes from exports and what it spends on imports over a certain period of time. If a country produces highly popular exports, the currency will purely benefit from the extra demand generated from foreign buyers seeking to buy these goods. Therefore, a positive net trade balance strengthens the currency and vice versa.
