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Standard Chartered economists Carol Liao and Hunter Chan note that China’s fiscal support softened in Q2 2026 after strong Q1 activity, leading to a sharp slowdown in infrastructure FAI similar to H2-2025. They expect the government to accelerate infrastructure spending and local government special bond issuance in H2-2026, using existing quotas and potentially front-loading 2027 issuance if exports or housing weaken further.
Fiscal pace and infrastructure outlook
"The China government’s fiscal support softened in Q2 after a strong start to the year. In April-May, overall broad spending fell 5.7% y/y even as broad revenue growth accelerated to 2.2% y/y, shrinking the broad deficit to a three-year low. While subsidies to households are evenly distributed through the year, investment spending seems to have moderated, markedly reducing infrastructure FAI, in a pattern similar to H2-2025."
"The government might have fine-tuned the pace of fiscal implementation intentionally. Q1 activity exceeded market expectations, supported by front-loaded fiscal support and strong exports. In April-May, general public budget spending fell 2.4% y/y, despite the 6.6% y/y rise in revenue."
"Under the government funds budget, local government special bond (LGSB) issuance slowed notably in Q2. Land sales revenue continued to deteriorate in Q2, constraining local governments’ spending capability; LGSB funding could have partly offset this drag if issuance had not slowed."
"We expect fiscal support to re-accelerate in H2, particularly through infrastructure investment. Given comfortable fiscal room in H2, we expect the government to accelerate issuance to fully utilise the existing quota before considering further stimulus."
"If exports weaken unexpectedly or the housing downturn exerts a greater drag on local government funding in Q3, policymakers could respond by front-loading the 2027 LGSB issuance quota or authorising additional local government bond issuance from the previously unused debt quota."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- NZD/USD stalls near 50- and 200-day SMA resistance zone.
- RSI turns bullish, signaling buyers are gaining momentum again.
- Break above SMA confluence exposes 0.5834 and 0.5892 levels.
The New Zealand Dollar extended its rally, registering solid gains versus the US Dollar after the latest US inflation report, which tempered speculation of a Fed rate hike and trimmed investors' bets by half. At the time of writing, the NZD/USD is trading at 0.5809, up by more than 1%.
NZD/USD Price Forecast: Technical outlook
The NZD/USD trend is downwards, with the pair still trading below the 50- and 200-day Simple Moving Averages (SMAs) at around 0.5810-0.5819. Earlier, the pair reached a daily high of 0.5843, threatening to decisively clear the 200-day SMA, but sellers stepped in, driving spot prices towards the 0.5800 figure.
From a momentum standpoint, buyers are gaining traction. The Relative Strength Index (RSI) turned bullish on July 9, but the price action consolidated around 0.5750 for three days before the next leg up to 0.5800.
If the NZD/USD clears the confluence of the 50- and 200-day SMAs, this opens the path to challenge the 100-day SMA at 0.5834. A breach of the latter will expose the March 19 daily high at 0.5892, ahead of 0.5900. On further strength, the next area of interest would be the February 26 high at 0.6014.
In a bearish scenario, the NZD/USD must clear the low of the day (LOD) at 0.5744, which could exacerbate a drop towards the 0.5700 level. Below this, the next area of demand is the July 8 daily low at 0.5672.
NZD/USD Price Chart — Daily
New Zealand Dollar Price This week
The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies this week. New Zealand Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.16% | -0.04% | 0.28% | -0.68% | -0.40% | -0.85% | 0.19% | |
| EUR | 0.16% | 0.12% | 0.44% | -0.54% | -0.30% | -0.70% | 0.36% | |
| GBP | 0.04% | -0.12% | 0.30% | -0.62% | -0.38% | -0.81% | 0.29% | |
| JPY | -0.28% | -0.44% | -0.30% | -1.04% | -0.68% | -1.17% | -0.12% | |
| CAD | 0.68% | 0.54% | 0.62% | 1.04% | 0.38% | -0.13% | 0.94% | |
| AUD | 0.40% | 0.30% | 0.38% | 0.68% | -0.38% | -0.41% | 0.55% | |
| NZD | 0.85% | 0.70% | 0.81% | 1.17% | 0.13% | 0.41% | 1.11% | |
| CHF | -0.19% | -0.36% | -0.29% | 0.12% | -0.94% | -0.55% | -1.11% |
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).
- GBP/USD trades just beneath the 1.3400 handle, surrendering the whole of a CPI spike that stalled ahead of 1.3450.
- US inflation fell 0.4% MoM in June, the largest monthly decline since April 2020, and the Fed Chair still refused to declare victory.
- The 200-day EMA caps the recovery for a second straight week while Thursday's UK growth data threatens the Sterling side of the ledger.
Cable trades just beneath the 1.3400 handle late in Tuesday's session, pinned under a 200-day Exponential Moving Average (EMA) that sits a few pips shy of the figure and has capped every recovery attempt for two weeks. The softest US inflation report in six years landed at 12:30 GMT; the pair spiked to within a few pips of 1.3450 and has since handed the entire move back.
Tuesday's rejection carries more weight than one headline normally earns: the bounce from early July's trough near 1.3150 has run directly into the falling 200-day average, the daily Stochastic Relative Strength Index is stretched above 80, and Sterling must now explain why the best inflation news the Dollar could hand it was worth roughly four hours of gains.
A deflation print bought by a ceasefire that no longer exists
June's Consumer Price Index (CPI) fell 0.4% on the month, the largest monthly decline since April 2020, dragging the annual rate to 3.5% from May's 4.2%. The core measure printed flat against a 0.2% consensus and eased to 2.6% YoY. The engine was energy: gasoline slid 9.7% in June after the ceasefire signed last month knocked roughly a quarter off Crude Oil.
The catch, and the reason the move faded, is that the report is already a period piece. Washington and Tehran are trading strikes again, the Strait of Hormuz sits effectively shut behind a reimposed blockade, and Crude Oil has clawed back roughly 10% in July. Tightening bets that a weak 57K payrolls print washed out at the start of the month are being rebuilt while the strait stays dark.
The Fed Chair reached the same verdict across both of Tuesday's testimony slots (12:30 and 14:00 GMT), telling lawmakers that one good report proves nothing and recommitting to the 2% target. A sitting Fed Governor had already spent Monday promising to vote for an immediate hike if core misbehaved.
Rate futures took the hint without abandoning the plot: hold odds for this month's meeting jumped toward 86%, yet pricing still assigns roughly seven-in-ten odds to at least one hike by year-end and nothing to a cut. That mix pulled the Dollar off its lows and the Pound off its highs through the New York afternoon.
Sterling's home front offers no rescue
The Bank of England is running its own version of the same movie. Bank Rate has held at 3.75% since December; June's decision split 7-2, with two members demanding an immediate move to 4.00%. The Governor has spent the summer calling cuts off the table while July's 13% energy price cap increase works through household bills, and the Bank itself projects inflation, 2.8% now, back above 3.5% by year-end.
Tuesday evening layers politics on top: the Governor is using the Mansion House address (20:00 GMT) to press the incoming Burnham government on growth and fiscal discipline, a reminder that the Labour handover remains a background risk for Sterling rather than a resolved story. A currency this sensitive to risk appetite, with the Strait of Hormuz on every front page, does not get to rally durably on someone else's soft inflation data.
The rest of the week gets a vote
Wednesday's Producer Price Index (12:30 GMT) is the quiet threat: the core measure is seen accelerating to 5.2% YoY from 4.9%, which would tell Fed officials that pipeline pressure never received the ceasefire memo. The Fed Chair returns for a second day of testimony at 14:00 GMT, the Beige Book follows at 18:00 GMT, and the Bank of England's chief economist takes a turn at 10:30 GMT.
Thursday hands the microphone to the Pound briefly, with May's Gross Domestic Product print landing at 06:00 GMT against consensus of 0.1% growth after a 0.1% contraction; industrial and manufacturing production are forecast to shrink. US Retail Sales follow at 12:30 GMT, seen slowing to 0.2% MoM from 0.9% with the ex-autos reading at -0.1%. A limp UK number set against US demand that is cooling rather than cracking is the mix that has kept the pair beneath the 200-day EMA all month.
Friday caps the week with July's preliminary Michigan consumer sentiment at 14:00 GMT, forecast at 51 from 49.5, alongside the survey's one-year and five-year inflation-expectation reads. Fed speakers have made a habit of citing those series when arguing that a shut Hormuz can still un-anchor household price psychology, so a hot expectations number would complete the CPI unwind.
Technical levels
Resistance: The 200-day EMA a few pips beneath 1.3400 is the immediate ceiling, with Tuesday's rejection zone ahead of 1.3450 stacked behind it; the pair has no business discussing 1.3500 without a fresh catalyst.
Support: The 1.3350 region is first, where the intraday base and the 50-day EMA converge; below that sits 1.3300, with early July's trough near 1.3150 the last line of defence.
Bias: Lower. A pair that cannot clear its 200-day EMA on the best US inflation news since 2020, with the daily oscillator stretched above 80, is a pair waiting to be sold; the path of least resistance runs to 1.3350 and then 1.3300 unless buyers force a daily close above the average and through 1.3450.
GBP/USD daily chart
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.
Commerzbank’s Dr. Henry Hao and Moses Lim note S&P Global Ratings affirmed Indonesia’s BBB sovereign rating with a stable outlook, citing fiscal discipline and adherence to the 3% deficit ceiling. Nonetheless, S&P views recent fiscal and external deterioration as temporary but flags higher bond yields and weaker Indonesian Rupiah (IDR) as headwinds. USD/IDR rose toward all-time highs, even as Bank Indonesia (BI) pledged to go all out to keep Rupiah stable.
Rating stable but FX under pressure
"S&P Global Ratings affirmed Indonesia’s BBB sovereign rating and maintained stable outlook yesterday, despite Fitch Ratings and Moody’s Ratings downgrading their outlooks earlier this year. "
"The agency assessed that fiscal policy remains broadly stable, highlighting Indonesia’s “record of fiscal discipline over multiple administrations". This supports its expectation that the statutory budget deficit ceiling of 3% of GDP will continue to be observed."
"S&P Global Ratings views the recent deterioration in fiscal and external positions as temporary. Higher commodity prices and the ongoing rationalisation of the free school meal programme are expected to provide support. However, it flagged higher bond yields and a weaker IDR as headwinds, contributing to a higher interest-to-revenue ratio."
"It also noted that Bank Indonesia (BI) retains operational independence comparable with regional peers. Overall, the decision is more a removal of a potential headwind than a positive catalyst for Indonesian assets."
"In FX, USD/IDR rose 0.3% to 18,105 yesterday, approaching its all-time high level of 18,178 recorded in early June. This was largely due to a stronger USD and higher global crude prices. However, last Tuesday, BI pledged to "go all out to keep the rupiah stable with a tendency to strengthen", signaling an increased urgency to support the IDR."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- GBP/JPY consolidates within 217.00-218.00 range after bullish breakout.
- RSI confirms buyers remain in control of near-term momentum.
- Break above 218.00 exposes 219.00 and 220.00 resistance.
The British Pound registers gains against the Japanese Yen on Tuesday, rising by over 0.12% to 217.04, with the cross-pair poised to test the year-to-date (YTD) high of 218.01.
GBP/JPY Price Forecast: Technical outlook
The trend is up, as depicted by price action, as GBP/JPY surpassed the April 30 daily high of 216.60, opening the door to consolidation within the 217.00-218.00 range. Although the technicals suggest that further upside is seen, speculation that Japanese authorities might intervene in the FX markets keeps buyers cautious from opening fresh long bets, which could drive the pair higher.
Momentum as measured by the Relative Strength Index (RSI) shows that buyers are in charge, meaning that further upside is expected.
If GBP/JPY clears 218.00, this paves the way to challenge the 218.50 mark, ahead of 219.00. Once those levels are taken out, the next resistance is 220.00, followed by the January 2008 monthly high of 222.76.
On the other hand, the first support for GBP/JPY is at 217.00. Below this area, the next area of demand would be the April 30 high of the day (HOD) at 216.60. Once cleared, the next stop would be the 216.00 mark, followed by the 215.00 psychological level.
GBP/JPY Price Chart — Daily
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.17% | -0.00% | 0.34% | -0.65% | -0.35% | -0.79% | 0.13% | |
| EUR | 0.17% | 0.17% | 0.44% | -0.48% | -0.22% | -0.62% | 0.33% | |
| GBP | 0.00% | -0.17% | 0.24% | -0.66% | -0.39% | -0.80% | 0.20% | |
| JPY | -0.34% | -0.44% | -0.24% | -1.00% | -0.59% | -1.08% | -0.14% | |
| CAD | 0.65% | 0.48% | 0.66% | 1.00% | 0.38% | -0.10% | 0.86% | |
| AUD | 0.35% | 0.22% | 0.39% | 0.59% | -0.38% | -0.41% | 0.45% | |
| NZD | 0.79% | 0.62% | 0.80% | 1.08% | 0.10% | 0.41% | 1.00% | |
| CHF | -0.13% | -0.33% | -0.20% | 0.14% | -0.86% | -0.45% | -1.00% |
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 British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
United Overseas Bank (UOB) analysts Quek Ser Leang and Lee Sue Ann note that USD/CNH remains in a consolidation phase, with intraday price action confined to tight ranges. They describe recent moves as part of a broader sideways pattern and reiterate that, for now, the Dollar is expected to trade within defined boundaries between 6.7700 and 6.8100 against the Chinese Yuan.
Dollar-Yuan pair stuck in range
"24-HOUR VIEW: Last Friday, USD dropped to 6.7766 before rebounding to close at 6.7818. Yesterday, when USD was at 6.7845, we highlighted that “the sharp decline appears to have stabilised somewhat, and today USD is likely to consolidate between 6.7780 and 6.7920.” Our view of consolidation was not wrong, even though USD traded within a slightly narrower range than expected (6.7779/6.7895). The price action still appears to be part of a consolidation phase. Today, we expect USD to trade between 6.7785 and 6.7915."
"1-3 WEEKS VIEW: We continue to hold the same view as last Friday (10 Jul, spot at 6.7930). As highlighted, “for the time being, we expect USD to trade in a range, most likely between 6.7700 and 6.8100.”"
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
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