Forex News
UOB Global Economics & Markets Research economists Enrico Tanuwidjaja and Vincentius Ming Shen assess Indonesia’s fiscal metrics, noting a primary surplus in May despite rapid expenditure growth. They highlight strong tax-driven revenue supported by the Coretax system, elevated central government spending on social programs, and maintain a 2026 fiscal deficit forecast near 2.9% of Gross Domestic Product (GDP), with potential narrowing if tax reforms and spending cuts succeed.
Fiscal stance, deficit and financing risks
"Indonesia’s fiscal position improved in May, with the primary balance returning to a surplus of IDR58.6tn."
"As a result, the fiscal deficit widened slightly to 0.70% of GDP from 0.63% in April, although it remained well below the statutory ceiling of 3% of GDP, preserving ample fiscal policy flexibility."
"Looking ahead, prudent fiscal management remains essential."
"We maintain our fiscal deficit projection of approximately 2.9% of GDP for 2026, reflecting sustained government spending momentum."
"Nevertheless, the deficit could narrow should revenue-enhancing measures—particularly tax reforms—prove effective and expenditure rationalization measures, such as a reduction in the Free Nutritious Meals Program budget from IDR335tn to IDR268tn (and recent newsflow indicated that it could even materialize to under IDR200tn), be implemented successfully."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/CHF ticked higher again on Tuesday, with the Swiss side of the calendar completely empty.
- The Franc's rebound off its 14-year low has been grudging, and haven demand keeps fading.
- The SNB sits pinned at zero and ready to intervene, capping Franc strength from above.
There is a certain honesty to a currency with nothing to say for itself, and the Swiss Franc spent Tuesday doing exactly that. With not one Swiss data release on the calendar this week, the Franc has no story of its own, leaving USD/CHF to drift on whatever the Dollar side of the tape serves up. The pair ground fractionally higher, extending a 2026 recovery off April's 14-year low near 0.7750 that has been shallow and wholly borrowed from abroad.
Borrowed direction from the Fed
The only real pulse in USD/CHF this week comes from across the Atlantic. The Federal Reserve (Fed) has spent a month convincing markets it is likelier to hike than cut: June's hold was a fourth straight, but the projections dropped the old easing bias and left half the committee pencilling in a 2026 hike, keeping the Dollar firm.
The awkward part for Dollar bulls is that the data has begun to undercut the rhetoric. Softer US labour readings have trimmed the odds of another hike, and CME FedWatch now prices the July 29 meeting as a hold with better than seven-in-ten confidence, up from nearer three-in-five a fortnight ago. Fed speakers dot the week, tested against a cooling jobs picture.
A haven that keeps leaking
Whatever the Franc cannot earn from Swiss fundamentals it usually collects in a crisis, and here too the picture has turned. The safe-haven premium that poured in during the Middle East conflict has drained since the guns fell quiet, leaving the Franc close to five percent weaker than before the fighting. Renewed regional flare-ups buy only a brief bid that fades fast.
More damaging is that when investors did reach for shelter this year, they bought Dollars, not Francs. The Fed's hawkish tilt handed the Dollar a yield edge the Franc, stuck at a zero policy rate, cannot match, and a haven paying nothing loses to one paying three and a half percent. The Franc's reputation is intact; its monopoly is not.
The SNB's thumb on the scale
Standing over all of this is a central bank that would rather the Franc did not rally at all. The Swiss National Bank (SNB) has held at zero for a fourth straight meeting and says plainly it will sell Francs whenever the currency threatens to appreciate too far, guidance traders ignore at their peril. With Swiss Consumer Price Index (CPI) inflation down to 0.5% in June and the International Monetary Fund (IMF) flagging eventual rate cuts, nothing domestic pushes the other way.
The result is a Franc squeezed from both sides: nothing in the data lets it strengthen, and the moment it tries, the SNB leans against it. For USD/CHF the downside is quietly defended even when the Dollar goes nowhere, which is much of why the pair keeps drifting higher on days when nothing should be happening.
What the minutes might stir
The one scheduled event with the power to move USD/CHF this week is not Swiss at all. The minutes of the June Federal Open Market Committee (FOMC) meeting land Wednesday at 18:00 GMT, and with the hawkish turn sitting awkwardly against softer jobs data, traders will read them for how real the appetite for a 2026 hike is. A hawkish record lifts the Dollar and presses the Franc lower; a softer one takes the pressure off. US jobless claims Thursday are the only other release worth watching.
Levels to watch
Resistance: The 0.8100 handle is the first hurdle, where the pair has stalled repeatedly through late June and again this week. Above it, the June high near 0.8150 caps the entire 2026 recovery, and a close through there is the first real sign the Franc's grudging slide has further to run.
Support: The 0.8050 area is the nearest floor, with the 0.8000 handle the more important shelf below. The rising 50-day and 200-day Exponential Moving Averages (EMA) now sit stacked just under 0.8000, the line between a shallow pullback and a genuine Franc recovery.
Bias: The path of least resistance stays higher, if grudgingly, with a hawkish Fed and a central bank defending the Franc's downside both arguing for USD/CHF to grind toward 0.8100 while it holds 0.8000. An intraday Stochastic Relative Strength Index (Stoch RSI) already overbought argues the next leg waits for a shallow dip, and a decisive break below 0.8000, most likely on a haven scare or dovish minutes, would mark the Franc finally finding a reason of its own to rally.
USD/CHF daily chart
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
- DJIA touched a fresh intraday record before reversing to close lower on Tuesday.
- A rotation out of AI and semiconductor names dragged the index off its highs.
- A jump in Crude Oil prices after a Strait of Hormuz attack added to the risk-off tone.
The Dow Jones Industrial Average spent Tuesday arriving late to a party the rest of the market had already begun to leave. The index tagged a fresh intraday record near 53,300 at the New York open around 13:30 GMT, then handed the gains straight back as a rotation out of artificial intelligence (AI) and semiconductor names swept the tape. By the close it had shed more than 500 points from that high, finishing near 52,850 and down about 0.35%, which on Tuesday counted as resilience.
The awkward part is that the record barely outlasted the opening auction, and it survived at all only because of the same stodgy, tech-light makeup that has made the index this year's laggard. The Nasdaq Composite lost more than 1% and the S&P 500 roughly half that, while the Dow's heavier weighting in healthcare, financials and consumer staples did exactly what it is built to do when the fashionable trade breaks.
The chip trade cracked in Asia and travelled west
None of this started on Wall Street; it simply arrived there. South Korea's Kospi fell almost 5% overnight after Samsung slid close to 7%, its record quarterly profit buried beneath fresh worry about spending and chip demand. European technology stocks then shed more than 3%, so US chips opened already carrying two sessions of selling. Micron dropped around 6% and the wider complex fell more than 5%, pulling the Dow's few technology names down with it.
DeepSeek reopens the oldest fear in the trade
Adding to the discomfort, reports that China's DeepSeek is building its own inference chip revived the fear that has always sat beneath the rally, that the sector's biggest customers are quietly designing their own way out. Nvidia slid more than 1%, and the speed of the reaction showed how crowded and one-directional the trade had become.
Crude Oil reopens a file the market had closed
Layered on top of the equity rotation, Crude Oil pushed higher after Iran struck a Qatari liquefied natural gas tanker near the Strait of Hormuz, the chokepoint through which close to a fifth of the world's Crude Oil moves. Brent traded above $73 and West Texas Intermediate (WTI) above $70, both up more than 2%. The market had quietly filed the conflict under resolved; one tanker attack was enough to remind it the US-Iran peace is still only interim.
The money went somewhere less exciting
The cash did not simply leave the AI trade; it went hunting for the parts of the market everyone had been ignoring. Eli Lilly gained about 3%, with JPMorgan and Microsoft also advancing and Walmart up more than 1% after cutting prices on staples such as ground beef and Coca-Cola. That defensive tilt cushioned the Dow, but research desks warn the second-quarter earnings bar now sits uncomfortably high, so the gap between healthy rotation and the first real crack may come down to how the coming results land.
The week still belongs to the minutes
Wednesday brings the Federal Open Market Committee (FOMC) minutes at 18:00 GMT. After a run of hawkish official commentary, including one voting member who leaned notably hawkish on Monday, the market will comb them for any sign the pause has a firm floor beneath it. Weekly initial jobless claims follow Thursday at 12:30 GMT, with the consensus near 218K against 215K prior. Hawkish minutes on stretched valuations and a wobbling AI trade is not the backdrop bulls would have chosen.
Levels to watch
Resistance: The record zone near 53,300 now caps the tape. Rallies into that band are likely to be sold until the semiconductor complex steadies. A daily close back above there reopens room toward 53,500.
Support: The reversal low near 52,750 is the first line to watch. A break there exposes 52,500 and then 52,000. The 50-day Exponential Moving Average (EMA) sits far below near 51,000, keeping this a pullback within an uptrend unless price loses the low 52,000s. The daily Stochastic Relative Strength Index (Stoch RSI) sat near the top of its range as the record printed, so some unwind was overdue.
Bias: Lower in the near term. The trend structure is still higher and the Dow's defensive tilt hands it a cushion the Nasdaq lacks, but a record that could not outlast the opening bell, an overnight semiconductor unwind and Crude Oil back on the geopolitical radar argue for chop and downside rather than fresh highs until the AI trade proves Tuesday was noise, not a turn.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- The New Zealand Dollar weakens against the US Dollar ahead of the Reserve Bank of New Zealand's policy decision.
- Renewed geopolitical tensions in the Strait of Hormuz boost demand for the US Dollar.
- Markets expect the RBNZ to deliver a 25-basis-point rate hike but remain skeptical about further policy tightening.
NZD/USD trades around 0.5685 at the time of writing on Tuesday, down 0.26% on the day. The pair remains under pressure as the US Dollar (USD) attracts renewed demand following fresh geopolitical tensions in the Middle East, while investors await the Reserve Bank of New Zealand's (RBNZ) monetary policy decision.
According to Bloomberg, citing a US official, Iran fired at least two missiles at commercial vessels transiting the Strait of Hormuz late Monday. Two ships sustained significant damage without any reported casualties, while the UK Maritime Trade Operations also confirmed that a tanker was struck by an unidentified projectile. The escalation in tensions has supported safe-haven flows and strengthened the US Dollar.
Meanwhile, expectations for Federal Reserve (Fed) monetary policy continue to evolve following the recent slowdown in the US labor market. Investors now expect the Fed to keep interest rates unchanged at its July and September meetings, while lower Oil prices, driven by an output increase from the Organization of the Petroleum Exporting Countries and its allies (OPEC+) and the US-Iran peace agreement, continue to ease inflationary pressures.
Attention now turns to the Reserve Bank of New Zealand's (RBNZ) policy decision due on Wednesday. ING expects the central bank to deliver a 25-basis-point rate hike, taking the Official Cash Rate to 2.5%, describing the move as an "insurance" hike. However, the bank believes the increase could prove to be a one-off move, limiting its positive impact on the New Zealand Dollar (NZD).
Several institutions share this cautious view. Commerzbank believes a rate hike could provide initial support to the Kiwi but argues that markets are already pricing in around 3.5 rate hikes over the next 12 months, a scenario it considers overly optimistic. Rabobank also believes that tightening expectations have become too aggressive and warns that a repricing of those expectations could weigh on the currency in the coming months. Meanwhile, BBH expects a 25-basis-point rate hike as well but argues that any NZD strength is likely to be short-lived before markets shift their focus to the central bank's forward guidance.
New Zealand Dollar Price Today
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.20% | 0.18% | -0.10% | -0.09% | 0.28% | 0.28% | 0.25% | |
| EUR | -0.20% | -0.03% | -0.30% | -0.30% | 0.10% | 0.10% | 0.04% | |
| GBP | -0.18% | 0.03% | -0.26% | -0.25% | 0.13% | 0.14% | 0.08% | |
| JPY | 0.10% | 0.30% | 0.26% | 0.02% | 0.41% | 0.39% | 0.35% | |
| CAD | 0.09% | 0.30% | 0.25% | -0.02% | 0.37% | 0.40% | 0.33% | |
| AUD | -0.28% | -0.10% | -0.13% | -0.41% | -0.37% | 0.00% | -0.07% | |
| NZD | -0.28% | -0.10% | -0.14% | -0.39% | -0.40% | -0.00% | -0.06% | |
| CHF | -0.25% | -0.04% | -0.08% | -0.35% | -0.33% | 0.07% | 0.06% |
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 New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).
Commerzbank’s Dr. Ralph Solveen notes that German industrial output rose 0.9% in May versus April, leaving April–May production slightly above the first-quarter average. With manufacturing sales outperforming output and energy prices having spiked only temporarily, he argues there is a growing likelihood that the German economy avoided contraction in spring and could resume recovery later in 2026 as Oil prices fall.
German industry shows tentative improvement
"Industrial output rose by 0.9% in May compared with the previous month. As a result, output in April and May was slightly above the Q1 average. Since sales have performed even slightly better, there is a growing likelihood that the German economy did not contract in the spring, despite the massive temporary spike in energy prices."
"Once again, German industry has reported quite encouraging figures: Following yesterday’s report of a significant increase in industrial orders, industrial output in May was also higher than in April, even though the 0.9% increase was slightly smaller than that seen in orders. However, this is not yet enough to suggest that the sideways trend in production has come to an end."
"After all, production in April and May was, on average, 0.5% higher than in the first quarter. In addition, manufacturing output – that is, production excluding construction and energy production – performed significantly better than production in this sector. Thus, the currently available figures certainly offer hope that the German economy did not contract in the second quarter, despite the massive rise in energy prices due to the war in Iran and the increased uncertainty."
"In the second half of the year, it is likely to resume its recovery in light of the recent sharp drop in oil prices."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- WTI climbs over 2.5% on Tuesday as renewed attacks near the Strait of Hormuz revive supply concerns.
- Three tankers were hit near the key shipping route over the past 24 hours.
- Technically, WTI retains a bearish bias despite improving momentum indicators.
West Texas Intermediate (WTI) crude Oil edges higher on Tuesday as fresh attacks near the Strait of Hormuz threaten the recovery in shipping seen in recent weeks following the interim US-Iran peace deal. At the time of writing, WTI is trading around $70.44, up about 2.65% on the day.
Iran has repeatedly stated that only vessels using its approved route through the Strait of Hormuz are considered safe and must coordinate with the Islamic Revolutionary Guard Corps (IRGC).
Three tankers were hit in the Strait of Hormuz over the past 24 hours, according to the United Kingdom Maritime Trade Operations (UKMTO). The incidents have revived some of the geopolitical risk premium in the Oil market.
Traders now turn their attention to Wednesday's US Energy Information Administration (EIA) weekly inventory report. US crude inventories have fallen for ten straight weeks, pointing to a tight supply outlook despite improving shipping through the Strait of Hormuz.
Technical Analysis:
On the daily chart, WTI US Oil maintains a bearish near-term bias as it holds below the 200-day Simple Moving Average (SMA) near $73 and well under the 100-day SMA around $86.
The recent bounce from sub-$69 levels has lifted the Relative Strength Index (RSI) toward a neutral 35 zone, while the Moving Average Convergence Divergence (MACD) has crossed marginally above zero, which hints at fading downside momentum but not yet a bullish reversal while price remains capped by these higher averages.
On the topside, initial resistance is located at the 200-day SMA at $73, ahead of the prior horizontal ceiling near $80, with the 100-day SMA at $86 reinforcing a broader medium-term supply area.
On the downside, immediate support is seen at the horizontal level at $67.00, with a deeper bearish extension exposing the next structural floor around $60.00.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- Hormuz ship attacks lift Oil, supporting Greenback demand.
- NY Fed survey shows households expect higher inflation.
- Burnham's fiscal pledge limits deeper Sterling political pressure.
The Pound Sterling (GBP) retreats against the US Dollar (USD) on Tuesday as tensions in the Middle East rise, following reports of attacks on two ships in the Strait of Hormuz. The GBP/USD pair trades at 1.3373, down 0.11%.
GBP/USD falls as Oil spike lifts Fed hike worries
The Greenback remains steady after the Islamic Revolutionary Guard Corps (IRGC) attacked ships that attempted to pass through the Omani route, ignoring the IRGC’s repeated warnings. These developments underpinned Oil prices and consequently the US Dollar, as high energy prices could force the US Federal Reserve (Fed) to raise interest rates.
The US Dollar Index (DXY), which measures the buck’s performance against six currencies, is up 0.05% at 100.93.
Data from the US showed that the trade deficit widened in May, driven by a jump in imports and a decline in exports. The Goods and Services Trade Balance deficit came at $-77.6 billion, more than the $-54.6 billion printed in April.
Aside from this, the New York Fed Survey of Consumer Expectations indicated that households foresee higher prices, with one-year inflation expectations rising from 3.5% in May to 3.7% in June. The data suggests that the Fed might still opt to keep rates unchanged, but could also increase the likelihood of a rate hike.
Money markets have increased the chances for a rate hike at the September meeting, with odds standing at 60.42%. For the July 29 meeting, there’s a nearly 75% chance that the Fed will keep rates unchanged.
In the UK, the economic docket remained absent, yet Sterling has benefited from the drop in Oil prices, which so far remained positively correlated with the Greenback, exerting downward pressure on the Pound.
Furthermore, the likely next Prime Minister, Andy Burnham, reiterated tha the will commit ot the fiscal rules, easing fears amongst traders, who feared that further spending could trigger a jump in UK GILTS and weakness in the GBP/USD.
GBP/USD Price Forecast: Technical outlook
On the daily chart, GBP/USD trades at 1.3375, keeping a mildly bearish tone as it remains capped beneath the latest reading of the 50/100/200-day simple moving average cluster at 1.3403. The pair is trading between the reclaimed upward support trend line anchored near 1.3159 and the descending resistance trend line that comes in at 1.3511, suggesting a consolidative phase within a broader corrective setup. The Relative Strength Index (14) at about 55 has lifted back into positive territory but only hints at stabilizing momentum rather than a clear bullish shift while price action holds below the stacked moving averages.
On the topside, initial resistance is seen at the triple simple moving average cluster around 1.3403, and a sustained break higher would open the way toward the descending trend-line barrier near 1.3511. On the downside, the next meaningful structural floor is the rising support trend line originating from 1.3159, where buyers are likely to defend the broader medium-term uptrend; a daily close below that area would reinforce the bearish bias and expose deeper losses toward the mid-1.31 region.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Pound Sterling FAQs
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, also known as ‘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).
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.
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.
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.
Royal Bank of Canada (RBC) economists Abbey Xu and Nathan Janzen note that Canada’s merchandise trade surplus increased to $4.2 billion in May from $3.4 billion in April, as exports grew and imports slipped. They highlight weaker energy price support, falling export volumes, and rising industrial machinery imports as signs of shifting demand and improving business investment within an uncertain trade environment.
Surplus grows as volumes soften
"Canada's merchandise trade surplus widened to $4.2 billion in May from $3.4 billion in April (revised upward from $2.7B), as exports rose 0.9% while imports declined 0.2%."
"Still, monthly trade data are heavily influenced by commodity prices and individual product categories, making it important to look beyond headline values when assessing underlying conditions."
"Export volumes excluding price effects fell 0.5% in May, providing a clearer read on underlying foreign demand, but are still tracking a large increase in the second quarter as a whole."
"Industrial machinery and equipment imports jumped 6.1% from April (up 12.8% year-over-year), offering a signal that business investment is edging higher as firms navigate an uncertain trade environment."
"Trade flows continue to be shaped by uncertainty surrounding U.S. trade policy, although our broader expectation remains that trade will become less of a drag on Canadian growth than it was in 2025 as the international environment gradually stabilizes."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Scotiabank strategists Shaun Osborne and Eric Theoret report the Euro (EUR) is slightly softer versus the US Dollar (USD) but supported by a sharp recovery in yield spreads and stronger German industrial production. Renewed hawkishness from European Central Bank (ECB) policymakers is lifting Euro area rate expectations. They see near-term upside for EUR/USD, with technicals pointing to a drift toward 1.15 within a 1.1400–1.1500 range and limited resistance before 1.1580.
Hawkish ECB supports Euro
"Bearish/neutral – the recovery in the RSI is important, reflecting a clear fade in bearish momentum and a drift back toward the neutral threshold around 50. The near-term balance of risk appears to favor gains and a drift toward 1.15 and we note the absence of any material resistance ahead of 1.1580. The medium-term trend is flat, and we look to a near-term range bound between 1.1400 and 1.1500."
"The EUR is soft, down a fractional 0.1% vs. the USD as it consolidates within its range from last Thursday with congestion in the mid-1.14s. Tuesday’s releases have been limited to stronger than expected German industrial production data for May (0.9% m/m vs. 0.1% exp.)."
"The outlook for relative central bank policy is providing renewed support for the EUR and yield spreads are showing a sharp recovery from last Wednesday."
"Euro area rate expectations are climbing sharpy, reflecting renewed hawkishness from a range of ECB policymakers, including executive board member Schnabel who specifically pushed back on the idea of softening the central bank’s guidance in response to the latest decline in oil prices."
"We see near-term upside for the EUR as markets reprice their outlooks for both the ECB (higher) and the Fed (lower)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
