- EUR/GBP strengthens to approximately 0.8570 in Monday’s European meeting.
- Weaker than the expected retail sales in the UK continue to undermine the pound of Šterlinky and create a tail for the cross.
- The ECB signaled a pause in the area of reduced rate despite low inflation.
The EUR/GBP During the early European trade hours on Monday on Monday Monday on Monday. Libra Sterling (GBP) weakens against the euro (EUR), because British retail sales dropped more than expected in May. Traders will watch the preliminary reading of the shopping managers index (PMI) in June from the euro area and the United Kingdom, which will be released later on Monday.
The Bank of England (BOE) decided to maintain rates at 4.25% at its June political meeting last week, as was generally expected. Governor Boe Andrew Bailey said that interest rates remain on the gradual journey down, but warned, “The world is very unpredictable.” Downbeat British retail sales could encourage traders to get their bets to further reduce BOE rates, which could drag GBP below.
Economists asked the Reuters agency Boe Politics creators reduce rates by 25 basis points (BPS) at the next Assembly in August and fourth quarters will reduce another 25 BPS.
On the euro queue, European Central Bank (ECB) He signaled a policy break this month, despite projections that show that price growth has fallen below its 2% goal. This could, in turn, provide some support for shared currency.
ECB Francois Villeroy de Galhau said on Thursday that the central bank would monitor the situation on signs of spilling from energy prices to basic inflation and wider price expectations, which could make it adapt to monetary policy.
Pound sterling faqs
Libra Sterling (GBP) is the oldest currency in the world (886 NL) and the official currency of the United Kingdom. It is the fourth most popular unit for foreign exchange (FX) in the world, which is 12% of all transactions, according to data 2022 on average $ 630 billion a day. Its key pairs of trading are GBP/USD, also known as a “cable” that represents 11%FX, GBP/JPY or “dragon”, as merchants (3%) and EUR/GBP (2%). The pound of Šterlinky is issued by the Bank of England (BOE).
The only most important factor affecting the value of the pound of ŠTERLINKů is the monetary policy that Bank of England Bank of England. Boe sets up its decisions on whether it has achieved its primary goal of “price stability” – a stable inflation rate of approximately 2%. Its primary tool for achieving this is to adjust interest rates. If inflation is too high, the Boe will try to increase the increase in interest rates again, which will be more expensive for people and businesses. This is generally positive for GBP, because higher interest rates make the United Kingdom an more attractive place for global investors to park their money. When inflation drops too low, it is a sign that economic growth slows down. In this scenario, the BOE will consider a reduction in interest rates to cheaper the loan, so businesses borrow more to invest in projects creating growth.
It relaxes to measure the health of the economy and affect the pound of pounds. Indicators such as GDP, production and services of PMI and employment can affect the direction of GBP. The strong economy is good for sterling. Not only does it attract more foreign investments, but it can encourage BOE to set interest rates directly strengthening GBP. Otherwise, if the economic data is weak, the pound of Šterlinky is likely to drop.
Another significant release of Data for Libra Sterling is a business balance. This indicator measures the difference between what the country earns from its exports and what they spend on imports in the given period. If the country creates a highly sought -after export, its currency will benefit purely from further demand created from foreign buyers trying to buy these goods. Therefore, a positive net business balance strengthens the currency and vice versa for a negative balance.
