Новини ринків
19.02.2024, 07:54

Pound Sterling jumps as BoE’s rate-cut prospects fade

  • Pound Sterling delivers an upside move as robust UK Retail Sales push back BoE rate-cut bets.
  • Upbeat UK Retail Sales data indicate that the economy will come out of a recession.
  • Trading volume in the FX domain would be light amid the holiday in US markets.

The Pound Sterling (GBP) demonstrates strength in Monday’s European session as the Bank of England (BoE) is expected to hold interest rates at their current level for a longer period. Persistent price pressures in the United Kingdom economy due to stubborn service inflation, steady labor demand, and robust household spending would allow BoE policymakers to maintain a hawkish narrative for a longer period. 

Last week, the surprisingly upbeat UK Retail Sales data indicated that the impact of higher interest rates by the BoE on consumer spending is fading. This indicates that the UK economy would come out of the technical recession sooner than previously thought. The UK economy entered a technical recession in the second half of 2023 as the BoE maintained interest rates higher to tame high inflation, which impacted consumer spending and business operations significantly.

The GBP/USD pair rises as the Pound Sterling tends to attract higher foreign inflows when the BoE maintains a hawkish stance for longer. Going forward, action in the Pound Sterling and the US Dollar will be guided by the preliminary S&P Global Manufacturing PMI for February.

Daily Digest Market Movers: Pound Sterling gains on improved market mood

  • Pound Sterling holds onto a six-day high near 1.2620 as the United Kingdom’s persistent service inflation and robust Retail Sales data for January have pushed back expectations of early rate cuts by the Bank of England.
  • Annual Retail Sales surprisingly rose by 0.7% while investors anticipated a decline of 1.4%. In December, the economic data contracted sharply by 2.4%.
  • The UK’s Office for National Statistics (ONS) reported that a 3.4% growth in food retail sales in January, prompted the rise in Retail Sales data.
  • The upbeat Retail Sales data demonstrates a stubborn inflation outlook and allows the BoE to maintain interest rates higher in times of a high-inflation environment.
  • Last week, BoE policymaker Katherine Mann and Chief Economist Huw Pill warned that  persistent service inflation remains a major concern as a catalyst for price pressures.
  • The latest inflation data showed that the headline and core Consumer Price Index (CPI) remained steady, while service sector inflation accelerated to 6.5% from 6.4% in December.
  • The BoE generally takes the core and service inflation seriously when deliberating its monetary policy decisions.
  • When asked about the UK economy’s vulnerable performance in the second half of 2023, Katherine Mann said the downturn was in line with higher expectations but she is focusing on forward economic indicators, which are indicating a persistent inflation outlook. 
  • Huw Pill said slowing headline inflation is good news for the central bank but tight labor market and service inflation are keeping price pressures persistent.
  • Pill emphasized the need of easing inflation data for several months to convince policymakers that inflation will return sustainably to the desired target.
  • Meanwhile, the US Dollar Index (DXY), which measures the Greenback’s value against six major currencies, declines toward a weekly low around 104.00 amid a cheerful market mood.
  • Trading volume is expected to remain light as United States markets will remain closed on Monday on account of Presidents’ Day.
  • The USD Index remains under pressure despite hotter US Producer Price Index (PPI) data pushing back expectations of rate-cuts by the Federal Reserve (Fed) pre-June.

Technical Analysis: Pound Sterling trades close to five-day high

Pound Sterling rises to a near six-day high around 1.2620 as the market mood remains upbeat. The GBP/USD pair delivers a mean-reversion move to near the 50-day Exponential Moving Average (EMA), which trades around 1.2630, resulting in a “wait and watch” approach for market participants. The 200-day EMA near 1.2500 continues to support the Pound Sterling bulls.

The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, which indicates a consolidation ahead.

Pound Sterling FAQs

What is the Pound Sterling?

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data.
Its key trading pairs are GBP/USD, aka ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

How do the decisions of the Bank of England impact on the Pound Sterling?

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates.
When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money.
When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

How does economic data influence the value of the Pound?

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP.
A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

How does the Trade Balance impact the Pound?

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

© 2000-2024. Уcі права захищені.

Cайт знаходитьcя під керуванням TeleTrade DJ. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

Інформація, предcтавлена на cайті, не є підcтавою для прийняття інвеcтиційних рішень і надана виключно для ознайомлення.

Компанія не обcлуговує та не надає cервіc клієнтам, які є резидентами US, Канади, Ірану, Ємену та країн, внеcених до чорного cпиcку FATF.

Політика AML

Cповіщення про ризики

Проведення торгових операцій на фінанcових ринках з маржинальними фінанcовими інcтрументами відкриває широкі можливоcті і дає змогу інвеcторам, готовим піти на ризик, отримувати виcокий прибуток. Але водночаc воно неcе потенційно виcокий рівень ризику отримання збитків. Тому перед початком торгівлі cлід відповідально підійти до вирішення питання щодо вибору інвеcтиційної cтратегії з урахуванням наявних реcурcів.

Політика конфіденційноcті

Викориcтання інформації: при повному або чаcтковому викориcтанні матеріалів cайту поcилання на TeleTrade як джерело інформації є обов'язковим. Викориcтання матеріалів в інтернеті має cупроводжуватиcь гіперпоcиланням на cайт teletrade.org. Автоматичний імпорт матеріалів та інформації із cайту заборонено.

З уcіх питань звертайтеcь за адреcою pr@teletrade.global.

Банківcькі
переклади
Зворотній зв'язок
Online чат E-mail
Вгору
Виберіть вашу країну/мову