Forex News
Brown Brothers Harriman’s (BBH) Elias Haddad notes GBP/USD trading directionless near 1.3500 as United Kingdom (UK) Q2 and June Gross Domestic Product (GDP) data show encouraging activity. Growth was driven by investment and consumption, with government spending a drag. Monthly GDP beat expectations, but Haddad judges these prints unlikely to shift Bank of England rate expectations, with July CPI seen as more important for policy.
Encouraging growth, focus on inflation
"GBP/USD is directionless around 1.3500. UK economic activity was encouraging over Q2 and in June."
"Real GDP rose 0.4% q/q vs. 0.6% in Q1, in line with consensus and marginally above than the Bank of England’s (BOE) 0.3% q/q forecast."
"The details point to respectable domestic demand activity as Q2 growth was mainly driven by gross fixed capital formation (+0.24ppt) and household consumption (+0.16ppt). Government spending was the biggest drag to growth in Q2 (-0.06ppt) reflecting declines in health and education."
"In parallel, monthly real GDP beat expectations. Real GDP unexpectedly increased 0.3% m/m in June (consensus: -0.1%) vs. 0.0% in May entirely driven by a 0.4% m/m rise in services output."
"Bottom line: the UK GDP prints are unlikely to shift the dial on BOE rate expectations. The UK inflation backdrop is a bigger concern for the BOE with the July CPI report due next week."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- The British Pound bounces back and flattens against the US Dollar.
- The Fed is unlikely to raise interest rates at the September policy meeting.
- UK Q2 GDP expands at a 0.4% pace, faster than BoE's estimates of 0.3%.
The British Pound (GBP) claws back its early losses against the US Dollar (USD) and flattens at around 1.3495 during the European trading session on Thursday. The GBP/USD pair bounces back as the US Dollar (USD) comes under pressure with investors prioritizing easing fears of the Federal Reserve’s (Fed) interest rate hikes in the near term over ongoing Middle East tensions.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% lower to near 99.90.
Traders have trimmed Fed interest rate hike bets due to easing United States (US) upside inflation risks and growing downside labor market risks.
According to the CME FedWatch tool, the odds of the Fed holding policy rates steady in the September meeting have increased to almost 60% from 30.4% seen a month ago.
US inflation data seen as broadly in line, giving the Fed room to stay on hold
Analysts at Commerzbank note that "July US CPI came in broadly in line with expectations," with the report indicating that "underlying inflation remains above the Fed's target but showed no broad-based re-acceleration, giving policymakers more room to remain on hold." Echoing that assessment, the Danske Bank research team highlights that "in the US, July CPI was broadly in line with expectations, with headline inflation at 3.4% y/y and core inflation at 2.5% y/y." They add that "the monthly details were also close to expectations, as headline inflation increased 0.1% m/m and core inflation increased 0.2% m/m," reinforcing the view that inflation is moving closer to target-consistent levels without signs of renewed upward momentum.
Going forward, investors will focus on the US Producer Price Index (PPI) data for July, which will be published at 12:30 GMT. The headline and the core PPI growth are expected to have cooled down to 4.9% and 4.2% Year-on-Year (YoY), respectively.
Meanwhile, the recovery move in GBP/USD seems to be supported by the British currency too. The United Kingdom (UK) currency attracted bids after the release of the Q2 Gross Domestic Product (GDP) data during the day.
UK growth beats expectations but fails to shift BoE outlook
According to TD Securities, "UK GDP surprised to the upside in June, coming in at 0.3% m/m (TDS: 0.0%; mkt: -0.1%; prior: 0.0%), and driven by strength in the services sector of 0.4% m/m (TDS/mkt: 0.0%; prior: 0.1%)." The bank notes that services growth was "broad-based, with only wholesale trade showing any real contraction." Despite the stronger monthly print, TD points out that "ultimately though, on a quarterly basis, UK economy grew in line with market expectations of 0.4% q/q, which is just above the BoE projections of 0.3% q/q," suggesting the upside surprise does little to alter the broader policy narrative.
GBP/USD Technical Analysis
In the daily chart, GBP/USD trades at 1.3491. The pair holds a bullish near-term bias as spot advances above the 20-period Exponential Moving Average (EMA) at 1.3441 and above the broken downward resistance trend line, now acting as support around 1.3457. The Relative Strength Index (14) at 58.5 stays in positive territory without reaching overbought conditions, which suggests steady upside momentum while the recent breakout above the trend barrier is being defended.
On the downside, immediate support is clustered between the trend-line break at 1.3457 and the 20-period EMA at 1.3441, with the current price area around 1.3491 acting as a near-term pivot. As long as GBP/USD holds above this support band, bulls could look for the pair to consolidate gains and extend the advance, while a daily close back below 1.3457 would hint at a false break and expose the EMA area as the next line of defense.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Gross Domestic Product (QoQ)
The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The QoQ reading compares economic activity in the reference quarter to the previous quarter. Generally, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Last release: Thu Aug 13, 2026 06:00 (Prel)
Frequency: Quarterly
Actual: 0.4%
Consensus: 0.4%
Previous: 0.6%
Source: Office for National Statistics
TD Securities’ Norges Bank analysis notes the policy rate was left unchanged at 4.25% in August, with a less hawkish tone than in June. Softer underlying Consumer Price Index (CPI) at 2.7% y/y reduced the need for further tightening, shifting guidance from a hike being "likely" to one that "may" be needed. TD removes its September hike call, expecting the rate to stay at 4.25%, while keeping an oil-driven hike scenario as an optional, non-base case.
Rate on hold with higher hike bar
"Norges Bank left the policy rate unchanged at 4.25% in August but delivered a noticeably less hawkish message than in June."
"Softer-than-expected inflation over the summer, with underlying CPI slowing to 2.7% y/y, has reduced the need for further tightening, prompting the Committee to downgrade its guidance from a hike "likely" being required to one that "may" still be needed."
"Policymakers remain unwilling to declare victory over inflation and continue to stress that policy must stay restrictive, but the burden of proof for another hike is now higher than it was in June."
"As a result, we are removing our forecast for an additional hike in September and now expect the policy rate to remain at the current restrictive 4.25% level for longer."
"Should the Middle East deal continue to be elusive and oil shift higher into the autumn months, the optionality for an additional hike may be back on the table, but is no longer our base case."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/JPY maintains its positive trend intact, yet with 159.50 resistance holding bulls.
- US CPI data heightens expectations of a steady Fed monetary policy in September.
- US Dollar's downside attempts remain limited above 158.50 so far.
The US Dollar (USD) remains practically flat against the Japanese Yen (JPY) on Thursday, as fading hopes of a Federal Reserve (Fed) interest rate hike in September have undermined speculative demand for the Greenback. The USD/JPY pair maintains its near-term upside trend intact, yet with bulls capped below the 50% Fibonacci retracement of July’s sell-off, at the 159.50 area.
Analysts at TD Securities highlight that "near-term inflation risks still skew higher, but Fed can be patient," noting that "markets moderately lowered hike pricing, but we are not in the clear just yet."
In the currency space, TD observes that "USD traded weaker as in-line CPI release still preserved bearish USD momentum," underscoring that the latest data have done little to disrupt the prevailing negative bias toward the Dollar.
Technical Analysis: US Dollar remains bullish but momentum fades
From a technical perspective, USD/JPY holds a bullish near-term bias, although intra-day momentum indicators reflect fading upside traction. The 4-hour Relative Strength Index (14) at 57.22 leans constructive, but the Moving Average Convergence Divergence (MACD) indicator is flattening near the zero line, suggesting that buyers might be starting to give up.
The 50% Fibonacci retracement of late July's intervention-induced decline, at the 159.50 area, is capping upside attempts for now, closing the path towards the 160.00 psychological area, considered a line in the sand for Tokyo authorities, and the July 31 highs, near 160.90.
On the downside, the 38.2% Fibonacci retracement of the latest upswing at 158.53 is containing downside attempts for now. Further down, the August 4 and 5 lows, near 157.30, and the cluster around the 23.6% retracement at 157.28 are likely to challenge bears.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.09% | 0.02% | -0.06% | 0.01% | 0.11% | 0.27% | -0.22% | |
| EUR | 0.09% | 0.12% | 0.02% | 0.07% | 0.22% | 0.35% | -0.12% | |
| GBP | -0.02% | -0.12% | -0.06% | 0.00% | 0.11% | 0.24% | -0.25% | |
| JPY | 0.06% | -0.02% | 0.06% | 0.05% | 0.18% | 0.28% | -0.18% | |
| CAD | -0.01% | -0.07% | 0.00% | -0.05% | 0.12% | 0.26% | -0.23% | |
| AUD | -0.11% | -0.22% | -0.11% | -0.18% | -0.12% | 0.14% | -0.34% | |
| NZD | -0.27% | -0.35% | -0.24% | -0.28% | -0.26% | -0.14% | -0.46% | |
| CHF | 0.22% | 0.12% | 0.25% | 0.18% | 0.23% | 0.34% | 0.46% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
- Gold pulls back from a two-month high ahead of US PPI data.
- Fading Fed rate-hike expectations and falling US Treasury yields help cushion the downside in the non-yielding metal.
- XAU/USD struggles around the 100-day SMA, while bullish RSI and MACD readings suggest buyers still retain some control.
Gold (XAU/USD) comes under selling pressure on Thursday, erasing all the gains recorded in the previous day after hitting a fresh two-month high of $4,449 during Asian trading hours. At the time of writing, the precious metal trades around $4,386, down 0.52% on the day.
The pullback appears to be driven mainly by profit-taking, as market participants remain reluctant to chase prices higher amid an uncertain macroeconomic backdrop. The recent rally from near $4,000 has largely been fuelled by softer US economic data, including a broadly in-line Consumer Price Index (CPI) and weaker-than-expected Nonfarm Payrolls (NFP) reports for July. These releases have reduced the chances of an imminent interest-rate hike by the Federal Reserve (Fed).
According to the CME FedWatch Tool, markets now assign a 36% probability of a September rate hike, down from 54% a week ago. As a result, front-end US Treasury yields are falling for a third consecutive day, which could keep Gold’s downside limited in the near term.
Attention now turns to the US Producer Price Index (PPI) due at 12:30 GMT, which could provide fresh clues about underlying inflationary pressures at factory gates.
Analysts at MUFG/BTMU highlight that the CPI data “supports our view that Fed is likely to leave rates on hold in September,” although they caution that “it is unlikely that the US rate market will scale back rate hike expectations much further in the near-term given a hike still can’t be ruled out.” They also flag ongoing upside risks to the inflation outlook, warning that “the lack of progress to reopen the Strait of Hormuz and elevated energy prices continues to pose upside inflation risks in the near-term.”
At the same time, they argue that “the lack of clear forward guidance from Fed Chair Kevin Warsh makes it harder to assess how they are likely to set policy going forward,” leaving markets to navigate a still uncertain policy path despite the latest CPI print.
Against this backdrop, Gold’s next directional move will depend largely on incoming US economic data and its impact on Fed interest rate expectations. Meanwhile, developments in the Middle East also remain in focus and continue to drive volatility across financial markets.
Technical analysis: Buyers struggle to clear the 100-day SMA
XAU/USD is fluctuating just around the 100-day Simple Moving Average (SMA) at $4,387 and well below the 200-day SMA at $4,502, while it holds comfortably above the 50-day SMA at $4,146, leaving the metal trapped between medium-term support and longer-term overhead resistance and hinting at a capped, neutral tone.
On the daily chart, the Relative Strength Index (14) at 65 sits in bullish territory, and the Moving Average Convergence Divergence (MACD) remains positive, which suggests underlying buying interest.
On the upside, a sustained move above the 100-day SMA at $4,387 could expose the $4,500 psychological mark, which closely aligns with the 200-day SMA at $4,502.
On the downside, the first meaningful support is located at the 50-day SMA at $4,146, followed by the psychological and structural floor at $4,000.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
According to a Reuters poll, the European Central Bank (ECB) will hike its deposit rates by 25 basis points (bps) to 2.50% in September, said 57 of 69 economists.
ECB Deposit Rate to be 2.50% at the end of 2026, said 55 of 69 economists (vs. 49 of 74 in July poll).
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
- The Australian Dollar remains supported by the Reserve Bank of Australia’s hawkish stance.
- Cooling US inflation reduces expectations of a September rate hike and limits the upside potential of the US Dollar.
- US-Iran tensions continue to fuel inflation risks through energy prices, capping gains in the pair.
AUD/USD trades around 0.7055 on Thursday at the time of writing, little changed on the day. The pair consolidates after surpassing 0.7090 on Wednesday, caught between support for the Australian Dollar (AUD) from a Reserve Bank of Australia (RBA) that remains cautious about inflation and resilience in the US Dollar (USD) amid persistent tensions between the United States (US) and Iran.
The RBA left its key interest rate unchanged at 4.35% at its meeting on Tuesday while maintaining a hawkish bias. The central bank believes that inflation risks remain tilted to the upside and stands ready to raise interest rates again if price pressures fail to ease sufficiently. RBA Governor Michele Bullock also indicated that the Board had discussed the possibility of raising rates.
Investors remain cautious, however, about the likelihood of further monetary tightening. Markets assign a 79% chance that the RBA will leave interest rates unchanged at its September 29 meeting, compared with a 21% chance of a 25-basis-point hike, according to Prime Terminal.
In the United States, the latest Consumer Price Index (CPI) report has reduced expectations of an imminent interest rate hike by the Federal Reserve (Fed). Annual inflation slowed to 3.4% in July from 3.5% previously, while core inflation declined to 2.5% from 2.4%, as both readings were in line with expectations. Markets now assign around a 60% chance to the Fed keeping rates unchanged in September according to the CME FedWatch Tool, having previously priced in a similar chance of a hike.
The decline in Fed tightening expectations theoretically limits the US Dollar’s upside and provides additional support to AUD/USD. However, tensions between Washington and Tehran complicate the inflation outlook. Volatility in Oil prices and the risk of disruptions in the Strait of Hormuz could reignite energy price pressures and call into question the continuation of the US disinflation process.
US President Donald Trump says the United States has total control over the Strait of Hormuz, while Iran also claims control over the strategic waterway. This geopolitical uncertainty sustains demand for safe-haven assets, including the US Dollar, and caps the Australian Dollar’s recovery.
Attention turns to the US Producer Price Index (PPI), Weekly Initial Jobless Claims and remarks from several Fed officials. These developments could provide fresh clues about the Fed interest rate outlook and help AUD/USD break out of its current consolidation phase.
AUD/USD technical analysis
In the one-hour chart, AUD/USD trades at 0.7054, holding a mildly bearish near-term bias as it sits below the 100-period simple moving average (SMA) at 0.7057 and the upward-sloping trendline near 0.7064. The pair remains above the 200-period SMA at 0.7045, which hints at a broader consolidation rather than an outright downtrend, while the Relative Strength Index (RSI) around 45 reinforces a lack of strong bullish momentum after the latest pullback.
On the topside, initial resistance is seen at the 100-period SMA at 0.7057, with the former support trend line turned barrier around 0.7064 acting as the next cap if buyers attempt a rebound. On the downside, immediate support aligns at the 200-period SMA near 0.7045, followed by a horizontal floor at 0.7040; a stronger bearish extension would expose the deeper horizontal support around 0.7020.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann note USD/JPY closed little changed at 159.41 after briefly dipping to 158.58 and rebounding to 159.54. Intraday, the pair is expected to trade between 158.70 and 159.70. Over 1–3 weeks, they keep an upside-tilted bias, viewing any advance as part of a broader 157.00–160.20 range rather than a fresh trend.
Dollar-Yen holds firm but capped in range
"24-HOUR VIEW: Yesterday, we stated that USD “could trade between 158.95 and 159.60.” However, USD briefly declined to 158.58 and then bounced to a high of 159.54. USD closed little changed at 159.41 (+0.09%). We are not able to derive much from the price action. Today, USD could trade between 158.70 and 159.70."
"1-3 WEEKS VIEW: Our most recent narrative was from Tuesday (11 Aug, spot at 159.20), when we highlighted that “while the bias for USD is tilted to the upside, any advance is likely part of a higher range of 157.00/160.20.” Although USD traded in a relatively quiet manner over the past couple of days, we continue to hold the same view for now."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Lee Hardman at MUFG reports that the US Dollar’s initial post-CPI weakness quickly reversed, with the dollar index returning to around 100.00 as markets trimmed but did not abandon expectations for a September Fed hike. July CPI matched consensus, with energy driving headline gains while core inflation remains contained. MUFG expects the Fed to leave rates on hold in September, with USD stability likely over summer.
Fed outlook after benign US CPI
"The main event yesterday was the release of the latest US CPI report for July. The US dollar weakened initially after the report was released resulting in the dollar index falling to a low of 99.613 but it has since fully reversed all of those losses and climbed back up to the 100.00-level. The US dollar has proven resilient even as market participants have moved to further scale back Fed rate hike expectations."
"The US rate market is currently pricing in around 9bps of Fed hikes by the September FOMC meeting compared to around 12bps prior to the release of the US CPI report. There was initial relief amongst market participants that the CPI report for July did not provide any major surprises that could alter the outlook for Fed policy."
"Overall, the report supports our view that Fed is likely to leave rates on hold in September. However, it is unlikely that the US rate market will scale back rate hike expectations much further in the near-term given a hike still can’t be ruled out."
"The lack of progress to reopen the Strait of Hormuz and elevated energy prices continues to pose upside inflation risks in the near-term. At the same time, the lack of clear forward guidance from Fed Chair Kevin Warsh makes it harder to assess how they are likely to set policy going forward."
"The lack of follow through US dollar weakness after yesterday’s initial sell-off suggests USD stability is more likely over the summer."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Societe Generale strategists note USD/BRL has formed a higher low and is testing its 200-day moving average near 5.22, with upside projections toward 5.34–5.38. They have downgraded Brazil to neutral, warning that underpriced election and fiscal risks could weaken the Brazilian Real (BRL), even as carry remains supportive.
Real vulnerable as politics heat up
"USD/BRL recently formed a higher low around 5.04 and has broken above the descending trend line drawn since December 2024. The pair is now challenging the 200-DMA. "
"The June peak at 5.22 is a potential resistance. If USD/BRL overcomes this hurdle, an extended rebound could take shape."
"The next objectives may be located at projections of 5.34/5.38 and 5.46. The low recorded earlier this week at 5.08 represents the first support."
"In LatAm, the weakening of the BRL towards the 200dma near 5.205 is not going unnoticed. Thin liquidity does not escape scrutiny but political tensions are brewing ahead of the election, causing notable underperformance and possible rotation into MXN as a more appealing option."
"DI rates are grinding upwards across the curve and the Bovespa plumbed 7-month low of 168k yesterday. Our strategy team downgraded Brazil to neutral from bullish several weeks ago, arguing that election and fiscal risks are underpriced notwithstanding the favourable carry backdrop."
"Our economist Dev Ashish argues in his election outlook that victory for President Lula is the case and carries a 65% probability, alongside a divided Congress. In this scenario, the BRL could weaken towards 5.25-5.35, forcing the BCB to proceed cautiously with easing. The Selic rate would then drop to 11.50% by end-2027."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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