Tin tức thì trường
07.02.2024, 08:02

Pound Sterling rises amid improvement in investors’ risk appetite

  • Pound Sterling has stretched its upside recovery as the appeal of risk-assets improves.
  • UK recession fears have faded on prospects of early BoE rate cuts.
  • Fed policymakers refuse to provide timing of rate cuts amid uncertainty over inflation.

The Pound Sterling (GBP) shows some bullish moves in the European session on Wednesday as the appeal for risk-perceived assets has improved significantly. The GBP/USD rebounds strongly despite increasing prospects of early rate cuts by the Bank of England (BoE). 

The UK’s construction and service sectors have rebounded as prospects of rate cuts by the BoE have deepened amid easing price pressures. This has improved the confidence of business enterprises in the economic outlook.

The US Dollar has come under pressure despite the Federal Reserve (Fed) now expecting not to rush rate cuts amid a resilient United States economy. Fed policymakers continue to ignore discussions about the timing of rate cuts as the inflation situation is still uncertain due to robust labor market conditions and retail demand.

Daily Digest Market Movers: Pound Sterling advances while US Dollar drops further 

  • Pound Sterling has extended its upside above 1.2600 as the United Kingdom's economic prospects improve despite the Bank of England (BoE) maintaining interest rates in the restrictive trajectory.
  • After robust Services PMI data, UK S&P Global/CIPS Construction PMI rose sharply to 48.8 vs. expectations of 47.3 and the prior reading of 46.8. 
  • UK construction companies have become more optimistic about fading recession risks and rate cuts by the BoE amid easing price pressures.
  • Deepening prospects of loosening financial conditions and improving economic outlook have improved business optimism.
  • The odds of early rate cuts by the BoE escalated after a dovish guidance on interest rates by Bank of England Chief Economist Huw Pill. 
  • Huw Pill said on Monday that the central bank is now focusing on “when” rather than “if” it will start lowering its benchmark interest rates. Pill added inflation indicators are far from endorsing the commencement of an easy policy but the underlying inflation is not needed to return to 2% for rate cuts.
  • Also, Stephen Millard, a NIESR deputy director, said the good news for 2024 was that wages would continue to rise while inflation fell quickly towards the BoE's 2% target, probably allowing the central bank to start cutting interest rates in May, Reuters reported.
  • For fresh guidance on interest rates, investors will keenly observe how the labor market and service inflation will shape up.
  • The US Dollar Index (DXY) has come under pressure despite investors losing conviction over rate cuts by the Federal Reserve in May.
  • As per the CME Fedwatch tool, traders see a 53% chance for a rate cut by 25 basis points (bps) in May, which has come down as policymakers push back expectations of early rate cuts.

Technical Analysis: Pound Sterling rebounds above 1.2600

Pound Sterling advances above the round-level resistance of 1.2600 as the risk-appetite of the market participants is improving again. The GBP/USD pair recovers strongly after discovering buying interest near a seven-week low around 1.2500. The near-term outlook of the Cable is still downbeat as it is trading below the 20 and 50-day Exponential Moving Averages (EMAs), which trade around 1.2664 and 1.2634 respectively.

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. Bản quyền Teletrade.

Trang web này được quản lý bởi Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).

Thông tin trên trang web không phải là cơ sở để đưa ra quyết định đầu tư và chỉ được cung cấp cho mục đích làm quen.

AML Website summary

Cảnh báo rủi ro

Giao dịch trên thị trường tài chính (đặc biệt là giao dịch sử dụng các công cụ biên) mở ra những cơ hội lớn và tạo điều kiện cho các nhà đầu tư sẵn sàng mạo hiểm để thu lợi nhuận, tuy nhiên nó mang trong mình nguy cơ rủi ro khá cao. Chính vì vậy trước khi tiến hành giao dịch cần phải xem xét mọi mặt vấn đề chấp nhận tiến hành giao dịch cụ thể xét theo quan điểm của nguồn lực tài chính sẵn có và mức độ am hiểu thị trường tài chính.

Chính sách bảo mật

Sử dụng thông tin: sử dụng toàn bộ hay riêng biệt các dữ liệu trên trang web của công ty TeleTrade như một nguồn cung cấp thông tin nhất định. Việc sử dụng tư liệu từ trang web cần kèm theo liên kết đến trang teletrade.vn. Việc tự động thu thập số liệu cũng như thông tin từ trang web TeleTrade đều không được phép.

Xin vui lòng liên hệ với pr@teletrade.global nếu có câu hỏi.

Chuyển khoản
ngân hàng
Feedback
Hỏi đáp Online E-mail
Lên trên
Chọn ngôn ngữ / vùng miền