- GBP/USD reduces about 1.3280 in the Asian session early on Wednesday.
- The markets interact positively with the cancellation of Trump’s escalation and support for the US dollar.
- WSJ said that the United States aims to reduce its car tariffs.
GBP/USD pair remains weak near 1.3280 during the early Asian session on Wednesday. Comments from US Treasury Secretary Scott Besent a hint of ice melting in trade tensions between the United States of China, feeding optimism in the markets and strengthening the US dollar (USD) against the pound sterling (GBP).
Scott Beesen said on Tuesday that he expects a trade war for US President Donald Trump with China in the very near future. He also mentioned that facing the customs tariff with China cannot continue by both sides and that the world’s largest economists will have to find ways to escalate.
In addition, on Tuesday, Trump seemed to be threatening to shoot the Federal Reserve Chairman Jerome Powell from the table days after the president’s criticism was intensified because of the failure to reduce interest rates. Optimism and the abolition of trade war provides some support for Greenback.
Traders closely monitor the developments surrounding the commercial talks of the United States of America. The Wall Street Journal reported on Tuesday that the Trump administration is preparing for its conditions for commercial talks with the United Kingdom, aiming to reduce London to reduce barriers and other barriers other than fire on a wide range of American goods.
The United States aims to reduce a 10 % car tariff to 2.5 %, according to people who have knowledge of a document project that the Trump administration distributed to stakeholders this week, which determines the goals of trade negotiation with the United Kingdom. However, any signs of uncertainty in commercial policy can undermine the United States and create the back wind of the main husband.
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 for foreign unit (FX) in the world, as it represents 12 % of all transactions, with an average of 630 billion dollars per 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 it is known by merchants (3 %), and, 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.
