Forex News

• Burnham pledges to follow Reeves’ fiscal rules, easing nerves.
• US Dollar weakness helps Cable recover from early session lows.
• UK GDP, Warsh remarks, and US NFP drive the next catalysts.

The Pound Sterling (GBP) advances 0.40% on Monday after Andy Burnham, who is expected to become the new UK Prime Minister, commented that he will adhere to fiscal rules set by Chancellor Rachel Reeves at a speech in which he laid the path for the economy. The GBP/USD pair trades at 1.3244 after reaching daily lows of 1.3191.

GBP/USD gains as Burnham reassures investors on fiscal discipline

Cable is underpinned by broad US Dollar weakness, with the Greenback losing 0.20%, according to the US Dollar Index (DXY). The DXY, which tracks the performance of the buck’s value against six currencies, is down at 101.15.

Burnham said that he wouldn’t name government appointments until the end of the election process. He added that he will stick to the Labour Party’s 2024 manifesto, committing to certain fiscal rules set by the Finance Minister Reeves.

On the news, GBP/USD improved from around 1.3200 flat towards the current exchange rate, with markets relieved, listening to Burnham’s latest speech before being named Britain’s new Prime Minister, the seventh in the last ten years.

Although buyers are gaining momentum, they’re not out of the woods, as the Gross Domestic Product (GDP) print for Q1 2026 looms. In the US, the docket was absent on Monday, yet traders will be focused on jobs data, the ISM Manufacturing PMI, and the US Nonfarm Payrolls on Thursday, with the markets closed on Friday for the celebration of US Independence Day.

Alongside this, the new Fed Chair, Kevin Warsh, will be at the European Central Bank (ECB) Sintra Symposium, with traders focused on whether he offers any hints on monetary policy or stand pat.

Money markets had priced in 30 basis points of Federal Reserve (Fed) tightening by the end of 2026, according to Prime Terminal data.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3249, maintaining a bearish tone as spot holds below the clustered simple moving averages (50-, 100- and 200-day) grouped around 1.3424, while the long-standing downward resistance trend line, broken at 1.3529, stays well overhead. The Relative Strength Index (14) at 41.9 remains under the midline, hinting at subdued bullish momentum and reinforcing the notion that rallies are likely to be capped by the nearby moving average barrier.

On the topside, immediate resistance is provided by the triple simple moving average cluster near 1.3424, ahead of the former downward trend-line break at 1.3529, which marks a stronger hurdle for any recovery attempt. On the downside, the current area around 1.3249 acts as a short-term pivot, with more significant structural support only emerging toward the upward trend-line origin near 1.3159, where buyers could attempt to slow the decline.

(The technical analysis of this story was written with the help of an AI tool.)

HSBC argues that the Pound is more exposed to downside risks following Prime Minister Starmer’s resignation and the ensuing UK leadership contest. The bank highlights a less supportive macro backdrop, with UK–US 2-year spreads narrowing to near zero, a Bank of England hold at 3.75% expected through year-end, and deteriorating fiscal optics likely weighing on GBP in coming months.

Politics and macro headwinds for Pound

"In the UK, Prime Minister Starmer’s resignation has shifted market focus to the leadership contest and the policy direction of the next Prime Minister. With limited clarity, the GBP appears more exposed to downside risks than positioned for upside relief. Candidates must declare by 9 July."

"If favourite, Andy Burnham (Polymarket, 22 June) is unchallenged, a swift transition could see him in office by 16 July."

"Beyond politics, the macro backdrop is less supportive. UK-US 2-year rate differentials have narrowed sharply, from c66bp in April to roughly 0bp, reducing the carry support that has helped underpin the GBP. This reflects the Fed’s hawkish shift (17 June) versus a cautious Bank of England (BoE) hold at 3.75%, with our economists expecting the BoE to remain on hold through year-end."

"Fiscal optics have also deteriorated, with government borrowing exceeding the UK Office for Budget Responsibility’s (OBR) forecast for a second consecutive month. All these factors are likely to weigh on GBP in the months ahead."

"UK leadership uncertainty leaves the GBP more exposed to the downside."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

OCBC’s Sim Moh Siong and Christopher Wong expect Asian FX to start the week on a softer footing as AI-led equity losses and renewed US–Iran tensions keep the Dollar bid. High-beta Asian currencies such as KRW are seen struggling if regional equities remain weak, with Oil importers losing some relief from the earlier Brent pullback unless risk sentiment stabilizes quickly.

High-beta Asian FX under pressure

"Asian FX. Likely to start on a softer footing. Friday’s AI-led equity selloff still points to pressure from the equity-sentiment channel, especially if markets continue to reduce crowded AI/semiconductor exposure."

"The weekend re-escalation in US-Iran tensions adds to the risk-off tone, with crude likely to gap higher at the Monday open."

"That makes an unfriendly environment for Asian FX."

"USD can stay bid, oil importer FX may lose some relief from the earlier brent pullback, and high-beta Asian FX, including KRW may struggle if regional equities remain soft."

"Overall, Asian FX looks vulnerable to broad-based weakness unless risk sentiment stabilises quickly."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• AUD/USD loses ground as traders await RBA Minutes and China's PMI data.
• RBA Minutes could read hawkish if they highlight sticky inflation and the possibility of more tightening.
• China PMIs are key for AUD sentiment as stronger activity would support commodity-linked currencies.

AUD/USD trades near the 0.6880 level on Monday, down from Friday's close as traders await fresh catalysts from Australia and China. The Aussie remains under pressure after losing ground over the past month, while the US Dollar (USD) retains support as investors stay cautious ahead of key US labor market data later in the week.

Reserve Bank of Australia (RBA) Governor Michele Bullock participated on Sunday in a panel titled “From Cash to Stablecoins: The Anonymity of Money” at the Per Jacobsson Foundation Lecture in Basel. The topic was more focused on payments and digital money than near-term rates, but markets will still watch the official transcript, which the RBA says will be released on Tuesday, for any comments linked to monetary policy, inflation or financial stability.

Attention now turns to the RBA Meeting Minutes due early Tuesday. The Minutes should give investors more detail on why the Board left the cash rate unchanged at 4.35% at the June meeting, following an earlier 75-basis-point rate increase. Bullock said after the decision that inflation “remains too high” and that holding rates would allow the Board to assess how earlier tightening is flowing through the economy.

China will also be important for the Aussie this week. The NBS Manufacturing and Non-Manufacturing PMIs are due on Tuesday. China’s official manufacturing sector PMI is expected to edge back into slight expansion at 50.1 in June, after standing at 50.0 in May. The Non-Manufacturing PMI is expected to decline slightly to 49.9 from 50.1. Stronger Chinese data could support the Australian Dollar given Australia’s close trade ties with China, while another soft reading would likely weigh on AUD sentiment.

Short-term technical analysis:

On the 4-hour chart, AUD/USD trades at 0.6884, maintaining a bearish near-term tone as it remains below both the 20-period Simple Moving Average (SMA) at 0.6898 and the 100-period SMA at 0.7002. The pair is pressing against immediate overhead supply at 0.6886, while a subdued Relative Strength Index (RSI) at 34.96 hints that sellers still retain the upper hand, even as downside momentum shows signs of moderation.

On the topside, initial resistance is located at the nearby 0.6886 barrier, followed by the horizontal levels at 0.6904 and 0.6917, with the 20-period SMA at 0.6898 and the 100-period SMA at 0.7002 reinforcing a broader cap on recovery attempts. On the downside, the first notable support emerges at 0.6878, where a sustained break would open the way for a deeper slide in the pair in the coming sessions.

(The technical analysis of this story was written with the help of an AI tool.)

Scotiabank strategists Shaun Osborne and Eric Theoret note EUR/USD is holding within a short-term channel as markets await comments from ECB President Lagarde at the Sintra symposium, which historically has had limited impact on near-term price action. The pair is described as neutral to bullish, with resistance around 1.14–1.1450 and a need for a break above 1.15 to meaningfully improve Euro recovery prospects.

Euro stuck in mid-channel range

"ECB President Lagarde opens the ECB’s Sintra symposium at 13.30ET. Several top central bankers are participating in the forum this week (including Fed Chairman Warsh and BoC Governor Macklem on Wednesday) and the high-profile nature of the speaker list has the market’s attention."

"The forum’s title is “Shaping Europe’s Future; Innovation, Growth and Stability”. Typically, Sintra’s content has not had a major impact on short-term price action and that may remain the case this year. "

"Neutral/bullish—Tentative gains from last week’s test of the low 1.13s has run into some resistance around the 1.14 level. "

"Spot is sitting right in the middle of its short-term channel which stretches from 1.1360 to 1.1450 currently, which is hardly enticing for position takers."

"Gains through 1.15 are needed to boost the EUR’s recovery potential at this stage."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Silver declines as concerns over potential energy supply disruptions reinforce expectations of more persistent inflation.
• Iran's statements on the Strait of Hormuz keep markets on edge despite the prospect of renewed talks with the United States.
• Investors now await Thursday's Nonfarm Payrolls report for fresh clues on the Federal Reserve's monetary policy outlook.

Silver (XAG/USD) is down 2.37% on Monday, trading around $57.75 at the time of writing, as investors reassess the impact of geopolitical tensions in the Middle East on energy markets and the inflation outlook.

The white metal is facing profit-taking as concerns over potential disruptions to global energy flows reinforce expectations of higher inflation. The exchange of strikes between the United States (US) and Iran near the Strait of Hormuz over the weekend has renewed fears surrounding the strategic waterway, through which nearly 20% of global energy supplies transit.

Uncertainty remains elevated despite reports suggesting that Washington and Tehran could resume talks on Tuesday. Iran's Foreign Minister Abbas Araghchi stated that responsibility for the Strait of Hormuz rests solely with Tehran, while warning that any attempt to bypass Iran's preferred route would lead to "tension and escalation."

The potential rise in Oil prices driven by supply risks is fueling inflation concerns, a factor that reinforces expectations for a more prolonged restrictive monetary policy from the Federal Reserve (Fed). Higher interest rates increase the opportunity cost of holding non-yielding precious metals, weighing on Silver.

Investors are now turning their attention to the June US labor market report, with the release of the Nonfarm Payrolls (NFP) data due on Thursday. Economists expect the US economy to have added 114K jobs while the Unemployment Rate is forecast to remain unchanged at 4.3%. These figures could shape expectations for the Fed's interest rate path and provide the next major catalyst for Silver.

Commerzbank analysts Charlie Lay and Dr. Henry Hao highlight that China’s industrial profit growth slowed to 21.1% year-on-year in May, with weaker consumption and investment pointing to easing momentum. They expect official manufacturing and non-manufacturing PMIs to slip into contraction, even as Bloomberg consensus keeps them slightly above 50. Despite fading rate-cut expectations, they still see scope for a 10bp PBoC cut in H2.

Profit slowdown and PMI risks

"China’s industrial profit growth moderated in May for the first time since November 2025. Profits rose 21.1% yoy, down from 24.7% in April, bringing growth in the January–May period to 18.8% compared to 18.2% for January-April."

"Although the headline remains solid, the moderation suggests momentum is easing and that strong exports and higher producer prices are no longer fully offsetting weak domestic consumption and investment."

"Looking ahead, the NBS official manufacturing and non-manufacturing PMI readings for June are due Tuesday. Bloomberg consensus sees both PMIs barely in expansion territory, at 50.1 for manufacturing and 50.0 for non-manufacturing, while we expect both to slip into contraction. Slower profit growth, weak consumption, and falling investment continue to put pressure on policymakers to support activity."

"However, rate-cut expectations have faded, with just over half of Bloomberg-surveyed economists now expect the PBoC to stay on hold through end-2026. We still see room for a 10bp cut in H2."

"On the policy front, Vice Premier He Lifeng used a visit to Sichuan province to urge faster breakthroughs in core technologies, greater technological self-reliance, and stronger industrial and supply-chain resilience. His remarks reinforce Beijing’s emphasis on advanced manufacturing as a structural growth engine, even as domestic consumption remains subdued."

"In FX, USD/CNY rose 30 pips to 6.80 last Friday and 320 pips for the week. Offshore USD/CNH rose 30 pips to 6.80 last Friday and 210 pips for the week."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

BNY’s Geoff Yu notes that China has expanded its export control list to include more Japanese entities, raising supply chain risks for defense and rare earths, while Japanese commercial sales grew strongly in May. Despite USD/JPY trading near 162, iFlow shows JPY outflows and negative scored holdings, suggesting persistent bearish positioning even as geopolitical and domestic data remain supportive.

Supply chain tensions and weak flows

"China blacklisted more Japanese firms on Monday as its dispute with the Takaichi government intensified. The Ministry of Commerce added 20 Japanese organizations to its export control list and placed another 20 entities under closer monitoring. The measures ban Chinese exports with commercial or military uses to the blacklisted firms, while also restricting overseas entities from supplying Japanese companies with dual-use technology originating in China."

"Targets include defense-related institutes, Mitsubishi units, Mitsui E and S, and Japan Nuclear Fuel. Beijing said that Japan has not reversed its remilitarization path, while Tokyo has rejected that claim. The move raises supply chain risks, especially for rare earths and defense manufacturing, and extends tensions linked to Taiwan comments."

"Japanese commercial sales for May came in at ¥52.549tn, up 5.0% y/y and 1.4% m/m on a seasonally adjusted basis. Wholesale sales rose 4.9% to ¥39.102tn, while retail sales increased by 5.3% to ¥13.447tn. Within wholesale, gains were led by mineral and metal materials, other wholesale, agricultural and marine products, machinery and chemicals, while pharmaceuticals and building materials declined."

"Retail growth was broad-based, with strong gains in automobile and machinery sales. Department stores, supermarkets, convenience stores, drugstores, home centers and large home appliance retailers all posted y/y increases. Nikkei +0.15% to 69468, USDJPY +0.075% to 161.86, 10y JGB +1.9bp to 2.64%."

"USD and NZD attracted inflows, while CAD, JPY and NOK saw outflows. JPY scored holdings turned negative."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Scotiabank strategists Shaun Osborne and Eric Theoret note the Canadian Dollar (CAD) has gained modest relief as front-end US/Canada spreads retreat about 10bps from last week’s peak, though rate differentials remain punitive. They judge USD/CAD is trading close to their fundamental fair value at 1.4135 and stress that positioning indicators show an extremely overbought US Dollar (USD), implying limited upside and scope for a modest pullback.

Rally seen extremely stretched

"The CAD has found some relief in the past few sessions from the marginal retreat in front-end US/Canada spreads. The 2Y cash bond and swap spreads closed last week some 10bps off the intraday peak seen last Monday, a meaningful move after a sustained widening in rate differentials since the start of May."

"Spreads remain punishing for the CAD, however, and the narrowing seen in the rate differentials so far can only so much to boost sentiment. The reality is that, given where spreads are still, the CAD is trading relatively close to our fundamental fair value estimate today (1.4135)."

"Neutral/bearish—Minor net gains for the CAD through late week trade support the idea of a stabilization at least in its recent decline but there is little evidence of technical strength in the CAD on the short-term charts."

"What there is, however, is ample evidence of the extreme degree of stretch in the USD rally. The daily RSI peaked at near 89 last week, well into overbought territory. The oscillator has not been higher in at least 20 years."

"Spot remains two standard deviations above its 40-day MA. Both indicators point to an extremely overbought USD. That may limit dollar gains to around 1.4250/1.43. A modest retracement could take spot to 1.4075/80."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)