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Reserve Bank of Australia (RBA) Governor Michele Bullock is speaking at the press conference, explaining the reasons behind leaving the benchmark interest rate unchanged at 4.35% after the August monetary policy meeting.
Bullock is taking questions from the press as part of a new reporting format introduced by the central bank last year.

Key quotes from the RBA Press Conference 

The board hopes to slow the economy, sees upside risks to inflation.

Domestic economy still operating above capacity.

Expect period of subdued economic growth will be required to bring inflation down.

Still need to see progress before being confident on CPI.

We will raise rates again if needed.

Board is not ruling out further rate rises, need more information.

Board discussed raising rates.

Did not discuss a rate cut at the meeting only a raise or a stay.

While house prices have turned down, that is not the main game for us.

(This is a developing story. Please refresh the page for updates)

This section below was published at 04:30 GMT to cover the Reserve Bank of Australia's monetary policy announcements and the initial market reaction.

The Reserve Bank of Australia (RBA) board members decided to leave the Official Cash Rate (OCR) unchanged at 4.35%, following the conclusion of its August monetary policy meeting on Tuesday.

The decision came in line with market expectations.

The RBA extended the pause following three consecutive 25 basis points (bps) rate hikes earlier this year.

Summary of the RBA Monetary Policy Statement

Today’s policy decision was unanimous.

While the impact of the middle east conflict on inflation has so far been less than expected, headline inflation is still too high.

Board will be attentive to the data and the evolving assessment of the outlook and risks to guide its decisions.

Inflation picked up materially in the second half of 2025, and information since the beginning of this year confirms that some of the increase reflected greater capacity pressures.

The board remains focused on ensuring that high inflation does not become embedded.

Trimmed mean inflation also remains elevated and is little changed from the March quarter.

Board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if upside risks materialise.

Short-term measures of inflation expectations have eased but remain higher than earlier in the year.

Inflation is still too high.

Labour market leading indicators point to only limited easing in the near term.

With monetary policy judged to be somewhat restrictive, the board decided to leave the cash rate target unchanged while it assesses how the economy is evolving.

Resolution of the Middle East conflict remains uncertain, and there are scenarios where inflation is higher and activity lower than forecast.

Inflation not expected to return to around the midpoint of the target range until late 2027 and there are upside risks to this projection.

Following three increases in the cash rate target since the beginning of the year, financial conditions are now tighter than they were, and the economy appears to be slowing as expected.

RBA’s Statement on Monetary Policy

Trimmed mean inflation to remain above 3% until mid-2027, return to 2.5% by early 2028.

Financial conditions in Australia appear to be somewhat restrictive.

Inflation still elevated, risks skewed to upside.

RBA pares inflation forecasts, sees slightly higher unemployment.

Economy expected to move back into balance in 2027, little earlier than previously estimated.

Assumption for potential economic growth has been revised slightly higher on population growth.

Sees trimmed mean inflation at 3.3% Q4 2026, 2.6% Q4 2027, 2.4% Q4 2028.

RBA nudges up GDP forecasts on stronger business investment, population growth.

Sees GDP growth at 1.4% Q4 2026, 1.6% Q4 2027, 1.8% Q4 2028.

Sees CPI inflation at 3.6% Q4 2027, 2.6% Q4 2027, 2.4% Q4 2028.

Sees unemployment at 4.5% Q4 2026, 4.7% Q4 2027, 4.8% Q4 2028.

Forecasts make technical assumption of cash rate at 4.4% Q4 2026, 4.5% Q4 2027, 4.4% Q4 2028.

Labour market still a little tight, seen stable near term before easing gradually.

Recent government budgets have not changed outlook for public demand.

Housing market has softened by more than expected, loan growth to slow further.

Outlook for global growth revised higher given ai boom, resilience to gulf conflict.

AUD/USD reaction to the RBA interest rate decision

The Australian Dollar reacts little to the RBA’s decision. At the time of writing, the AUD/USD pair is down 0.10% on the day at 0.7049.

This section below was published on August 11 at 00:30 GMT as a preview of the Reserve Bank of Australia's monetary policy announcements.

• The Reserve Bank of Australia is set to hold the interest rate unchanged at 4.35% in August.
• Eyes on RBA Governor Bullock and updated forecasts for clues on the next policy move.
• The Australian Dollar braces for volatility on the RBA policy announcement.

The Reserve Bank of Australia (RBA) is on track to keep the Official Cash Rate (OCR) steady at 4.35% for the second consecutive meeting on Tuesday.

The decision will be announced at 04:30 GMT, accompanied by the Monetary Policy Statement (MPS) and updated economic forecasts. RBA Governor Michele Bullock’s press conference will follow at 05:30 GMT.

The Australian Dollar (AUD) is set to experience volatility around the RBA policy announcement and Bullock’s press conference, with markets focused less on the widely expected hold and more on signals about the central bank’s next policy move, as softer-than-expected inflation data could cloud the central bank’s outlook on interest rates.

RBA set for another pause, what’s next?

While markets had previously priced in the possibility of another rate hike in August, expectations have shifted dramatically following a softer-than-expected second-quarter (Q2) inflation report, reducing the urgency for the RBA to tighten policy again.

The turning point came with Australia's latest Consumer Price Index (CPI) report, which showed underlying inflation slowing more than expected.

The RBA's preferred Trimmed Mean CPI rose 0.8% quarter-on-quarter (QoQ) in the second quarter, below market expectations for a 0.9% increase. Annual Trimmed Mean inflation accelerated only modestly to 3.6% from 3.5%, remaining below the central bank's own 3.8% forecast.

Following the CPI release, Bloomberg data showed that the implied probability of a rate hike in August collapsed to just 4%, down from more than 20% before the data.

Expectations for a fourth rate hike later this year also receded sharply, with market pricing falling below 50%, compared with roughly 84% pre-data release.

This swift repricing suggests markets increasingly believe the RBA has room to remain patient, while assessing whether recent signs of easing inflation are sufficient to pause the tightening cycle.

Even though headline inflation benefited from lower fuel prices during June, Oil prices moved higher again after a renewed outbreak of conflict involving Iran during July.

Additionally, Australia's temporary fuel excise discount expired on August 2, removing a temporary source of downward pressure on fuel prices and potentially adding fresh upside risks for inflation in the months ahead.

Against this backdrop, the RBA is likely to adopt a cautious tone, maintaining a data-dependent approach, as policymakers continue to balance slowing economic momentum against still-elevated price pressures.

Additionally, the RBA could consider the updated inflation and growth forecasts and whether the likely reopening of the Strait of Hormuz is enough to calm inflation concerns and to signal a pause in the current tightening cycle.

RBA seen on hold as summer lull keeps focus on data

Analysts at Rabobank note that attention turns to Australia on Tuesday, when “the Reserve Bank of Australia sets rates.” They acknowledge that they are “not entirely convinced that the three hikes delivered since the start of the year are enough to mop up excess demand in the Australian economy, but the RBA seems to hope it is.” Even so, Rabobank expects policymakers to “hold rates unchanged this week,” a view they point out is shared by “all other 31 economists surveyed by Bloomberg.” More broadly, the bank highlights that “it’s peak summer, with a light data calendar and most central bankers on holiday,” adding that “the Fed’s Hammack is an exception.”

How will the Reserve Bank of Australia’s decision impact AUD/USD?

The AUD is hanging close to seven-week highs against the US Dollar (USD) ahead of Tuesday’s RBA policy announcements.

With a rate hold largely priced in, the policy statement and updated forecasts, alongside Governor Bullock’s message, will likely matter more than the rate decision itself.

If Bullock and the MPS acknowledge softer inflation while emphasizing patience and data dependence, that could reinforce expectations that interest rates have peaked, potentially weighing on the Aussie Dollar and the AUD/USD pair.

Alternatively, if inflation forecasts are revised higher, followed by Bullock’s still concerning remarks on inflation, it could leave further rate hikes on the table, providing fresh support to AUD/USD.

Dhwani Mehta, Asian Session Lead Analyst at FXStreet, highlights key technical levels for trading AUD/USD following the policy announcement.

“The Aussie pair trades firmly above the short- and medium-term moving averages. The 21-day and 50-day Simple Moving Averages (SMAs) bullish crossover underpins the advance, while the 200-day SMA at 0.6926 reinforces the broader bullish structure. The Relative Strength Index (RSI) near 60 leans higher but remains shy of overbought territory, suggesting upside momentum remains constructive on the daily chart.”

“On the topside, immediate resistance is located at the 0.7100 round level, which could act as the next pivot for trend continuation. Further up, the June 5 high near 0.7145 could be tested. On the downside, initial support is seen around 0.7000, the confluence zone of the 21-day SMA and 50-day SMA. Below that, the 200-day SMA at 0.6926 could act as a deeper line of defense,” Dhwani adds. 

• AUD/NZD falls as the Australian Dollar weakens following the Reserve Bank of Australia's latest interest rate decision.
• The RBA kept the Official Cash Rate unchanged at 4.35% for the second consecutive meeting.
• New Zealand Prime Minister Christopher Luxon called an urgent caucus meeting Wednesday to address growing speculation about his leadership.

AUD/NZD pares its daily gains, trading around 1.1960 during the Asian hours on Tuesday. The Australian Dollar (AUD) has drifted lower following the Reserve Bank of Australia’s (RBA) latest monetary policy decision, keeping the currency cross on a weaker footing. As widely anticipated by financial markets after second-quarter inflation figures came in lower than projected, the RBA opted to leave the Official Cash Rate unchanged at 4.35% for its second consecutive meeting.

RBA statement eyed for fresh guidance on inflation and growth

Brown Brothers Harriman’s Elias Haddad highlighted that the communications will be critical, noting that “The RBA’s August Statement on Monetary Policy will shed light on the bank’s inflation and growth outlook.” This detailed update is expected to help investors refine their views on how long the RBA can sustain its current hawkish stance and what that implies for the Australian Dollar’s carry appeal over the remainder of the year.

Meanwhile, central bank policy across the Tasman faces its own set of complications. Rising oil prices, driven by uncertainty over the potential reopening of the Strait of Hormuz, have sparked fresh debate on how the Reserve Bank of New Zealand (RBNZ) might approach its September policy meeting. Markets are exercising caution ahead of New Zealand’s third-quarter inflation expectation figures, particularly after the Q2 data showed an unexpected acceleration.

Compounding the regional uncertainty, New Zealand Prime Minister Christopher Luxon has called an urgent, in-person caucus meeting for Wednesday morning to confront growing speculation surrounding his leadership. Following a turbulent week marked by reports of MPs receiving calls about a potential leadership challenge, Luxon is acting decisively to suppress internal dissent before it metastasizes into a campaign-defining issue for the National Party.

• The Indian Rupee falls further against the US Dollar as oil prices extend the advance.
• US President Trump demands reparations for the war, as Iran did the same.
• Investors await the CPI data for July from both India and the US.

The Indian Rupee (INR) opens on a cautious note against the US Dollar (USD) on Tuesday. The USD/INR pair rises further to near 95.40 as surging oil prices due to escalating fears of a prolonged global supply disruption have weakened the Indian currency.

In the opening session, the MCX Crude Oil contract expiring on August 19 trades 0.45% higher to near Rs. 7,835, closer to its weekly high.

Trump also demands reparations for war

On Monday, United States (US) President Donald Trump also demanded compensation for war casualties in the Middle East from Iran, through a post on Truth Social, in a direct answer to Iran's own call for compensation, as a key condition for reopening the Strait of Hormuz, a vital passage to almost one-fifth of global energy supply.

US President Trump added that Iran should be held "responsible for the damages and death" caused to the people of Lebanon, Syria, Yemen and Gaza.

Over the weekend, Iran’s Mohammad Bagher Zolghadr, secretary of the council, set out six conditions for the Hormuz reopening.

Both sides demanding compensation for war damages have heightened uncertainty over the truce in the near term, boosting oil prices.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.

India-US CPI data comes under the spotlight

This week, the major trigger for the Indian Rupee and the US Dollar will be respective Consumer Price Index (CPI) data for July from their economies, which will be released on Wednesday.

India inflation holds steady as DBS flags mixed food trends and benign core

Economists at DBS Group Research note that key “inflation and trade numbers are due in the second week of August,” with “headline inflation in July… largely steady at 4.4% YoY vs June.” They point out that “high frequency data on food staples point to a rise in pulses, sugar, milk and edible oils, while vegetables have stabilized,” adding that “a catch-up in rainfall in July has helped boost sowing activity.” On the price side, DBS highlights that “adjustments in domestic retail fuel products (non-subsidized LPG was up 10% YoY in July) are also likely to reflect in the utilities and fuel segments.” Even so, they expect underlying pressures to remain contained, with “core readings… benign at sub-4% in July, helped also by moderation in precious metals in the period.”

In the US, both headline and core CPI are expected to have cooled down, with figures seen arriving lower at 3.4% and 2.5% Year-on-Year (YoY), respectively.

Signs of US inflationary pressures cooling down would ease fears of Federal Reserve (Fed) interest rate hikes further. This week, financial markets have rolled back hawkish Fed after the release of the US Nonfarm Payrolls (NFP) data for July, which showed a reduction in the overall labor force against estimates of a fresh addition of 80K workers.

Technical Analysis: USD/INR holds key 60-day EMA

In the daily chart, USD/INR trades at 95.40. The pair holds above the 60-day exponential moving average (EMA) at 95.26, keeping a modest bullish near-term bias as price respects this dynamic support zone.

Momentum is less conclusive, with the 14-day Relative Strength Index (RSI) hovering near 47, hinting at a consolidative tone rather than strong directional conviction, but the preservation of levels above the EMA favors mild upside while this floor holds.

On the downside, initial support is seen at the 60-day EMA at 95.26, followed by the June 26 low at 94.15. With no clearly defined overhead technical barriers in the immediate dataset, any sustained advance above the recent close would likely be driven by momentum shifts, while a daily close back below 95.2616 would weaken the current constructive bias and expose a broader corrective phase.

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

• Indonesia’s June Retail Sales fell 3.0% YoY, showing the mildest downturn since April as government support boosted spending.
• The US Dollar trimmed losses as surging crude oil prices from geopolitical tensions drove Treasury yields higher.
• CME FedWatch Tool shows market odds for a September Fed rate hike rising above 51% from 44.4% yesterday.

USD/IDR gains ground after two days of losses, trading around 17,850 during the Asian hours on Tuesday. The pair holds onto its gains as the Indonesian Rupiah (IDR) struggles following June Retail Sales data, which showed a 3.0% year-over-year (YoY) drop, a slight recovery from May’s 3.9% decline and the smallest fall since April. Early government support helped cushion households and support consumer demand, though the currency pair remained suppressed.

The USD/IDR pair holds gains as the US Dollar (USD) pares its daily losses, as geopolitical tensions have driven a sharp rally in crude oil, which in turn has pushed Treasury yields higher. Concerns are growing that the Federal Reserve (Fed) may feel compelled to raise rates sooner rather than later, even against the backdrop of a cooling labor market.

Investors are now closely watching upcoming inflation data this week to gauge the Fed's next move, with the CME FedWatch Tool showing that market-implied odds of a 25-basis-point Fed rate hike in September have climbed above 51%, up from 44.4% just a day prior.

However, according to TD Securities, “we expect output growth to move sideways this year,” as the “lingering impact of the oil shock” continues to weigh on activity. The bank warns that “the Iran conflict presents stagflationary risks, which we expect will keep the Fed on hold for the entire year,” even as “AI and high-income consumers have supported underlying growth.”

• Gold attracts buyers for the third straight day and climbs to over a two-month high on Tuesday.
• Receding Fed hike bets turn out to be a key factor driving flows toward the non-yielding bullion.
• Traders might opt to wait for further geopolitical developments and the latest US inflation figures.

Gold (XAU/USD) scales higher for the third consecutive day – also marking the fifth day of a positive move in the previous six – and climbs to its highest level since June 5, around the $4,435 area during the Asian session on Tuesday. Friday's weak US Nonfarm Payrolls (NFP) report pointed to signs of a cooling labor market and forced investors to scale back their expectations for an immediate interest rate hike by the US Federal Reserve (Fed). This, in turn, is seen as a key factor that continues to drive flows toward the non-yielding bullion.

Traders, however, are still pricing in the possibility that the US central bank will raise borrowing costs by the year-end amid inflation risks stemming from volatile oil prices due to the Middle East crisis. In fact, Iran ruled out any future negotiations with US President Donald Trump and said that it will wait until his term ends on January 20, 2029, to resume talks, dampening hopes for the reopening of the Strait of Hormuz. Furthermore, traffic through the Bab el-Mandeb Strait remains choked due to the Iran-backed Houthis' blockade against Saudi Arabia.

This led to the overnight sharp rise in crude oil prices and fueled inflation fears, underpinning prospects for a more hawkish Fed. The outlook, in turn, remains supportive of elevated US Treasury bond yields, which favors USD bulls and warrants some caution before positioning for any further near-term appreciating move for gold. Traders might also opt to wait for the release of the US inflation figures – the Consumer Price Index and the Producer Price Index on Wednesday and Thursday, respectively, for more cues about the Fed's future policy path.

The crucial data will play a key role in influencing the near-term USD price dynamics and providing some meaningful impetus to the Gold price. Apart from this, further developments surrounding the Middle East crisis might continue to infuse volatility across global financial markets and contribute to producing trading opportunities around the XAU/USD pair.

XAU/USD daily chart

Technical Analysis

An intraday breakout through the 100-day Simple Moving Average (SMA) and the 50.0% Fibonacci retracement of the April-June fall suggest that buyers retain control. Momentum indicators also back this constructive structure. The Relative Strength Index (RSI) is hovering just below overbought territory at 68.89, and the Moving Average Convergence Divergence (MACD) histogram is expanding in positive territory. This, in turn, suggests persistent upside pressure while the Gold price remains capped beneath the 200-day SMA at $4,498.

The next relevant hurdle is pegged around the 61.8% Fibo. retracement at $4,514.92, where a break would open the way toward the 78.6% retracement at $4,669 and the cycle high around $4,866.98. On the downside, initial support is seen at the 50.0% retracement level at $4,406, with the 100-day SMA at $4,389 reinforcing this zone. A deeper pullback would expose the 38.2% retracement at $4,297 and then the 23.6% level at $4,162, ahead of the structural floor near $3,945.

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

• AUD/USD edges lower after the RBA left rates unchanged at the end of the August meeting.
• A modest USD uptick further weighs on the pair, though the RBA’s hawkish tilt limits losses.
• Traders also seem hesitant to place aggressive directional bets ahead of US inflation figures.

The AUD/USD pair slides below mid-0.7000s after the Reserve Bank of Australia (RBA) announced its policy decision, though it lacks follow-through.

As was widely expected, the RBA decided to leave the Official Cash Rate (OCR) unchanged for the second consecutive meeting at the end of the August policy meeting. In the accompanying policy statement, the central bank noted that the impact of the Middle East conflict on inflation has, so far, been less than expected. This, in turn, disappointed Aussie bulls, which, along with a modest US Dollar (USD) uptick, exerts some pressure on the AUD/USD pair.

The RBA, however, said that inflation is not expected to return to around the midpoint of the target range until late 2027 and that there are also upside risks to this projection. The central bank added that it will continue to do what is necessary to bring inflation back to target, including increasing the cash rate target further. This holds back traders from placing bullish bets on the Australian Dollar (AUD) and acts as a tailwind for the AUD/USD pair ahead of the post-meeting presser.

Traders also seem hesitant and opt to wait for the release of the latest US inflation figures – the Consumer Price Index (CPI) and the Producer Price Index (PPI) on Wednesday and Thursday, respectively. Apart from this, further developments surrounding the Middle East crisis will influence the USD and provide some impetus to the AUD/USD pair. Nevertheless, spot prices remain well within striking distance of the highest level since June 16, touched last Friday.

AUD/USD daily chart

Technical Analysis

The AUD/USD pair is caught between the 100-day Simple Moving Average (SMA) at 0.7053 acting as immediate topside resistance and the 200-day SMA at 0.6928 providing underlying support, leaving the near-term bias neutral. A daily close above the 100-day SMA would open the way for a more sustained recovery, turning that level into a key pivot for the next leg higher. On the downside, the 200-day SMA at 0.6928 is the first important support; a slide back toward this longer-term average would hint at fading bullish pressure and expose the broader range floor below.

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

• The Australian Dollar drops against its peers as the RBA leaves its OCR steady at 4.355, as expected.
• Investors await RBA Governor Bullock’s press conference.
• Japan’s Current Account slips into deficit in June for the first time since January 2025.

The Australian Dollar (AUD) faces selling pressure against its major currency peers, trading 0.15% lower at around 112.20 against the Japanese Yen (JPY) during the Asian trading session on Tuesday.

The antipodean comes under pressure as the Reserve Bank of Australia (RBA) has left the Official Cash Rate (OCR) unchanged at 4.35% for the second meeting in a row.

Financial markets had already anticipated the RBA would maintain the status quo as Australian inflation came in lower than projected in the second quarter this year.

RBA seen on hold as TD Securities highlights restrictive policy and softer inflation

According to TD Securities, the RBA is now firmly in “pause and observe mode” as “policy is viewed to be restrictive,” with domestic “activity (especially housing) slowing in response to earlier hikes” and “the full impact of earlier hikes yet to be felt.” The strategists note that “lower-than-expected Q2 trimmed mean CPI gives the RBA space to pause at the August meeting,” adding that OIS markets are “pricing close to 0% odds of a hike.” In this context, TD Securities state, “we expect the RBA to keep the cash rate at 4.35% (consensus: 4.35%).”

For now, investors await remarks from RBA Governor Michele Bullock regarding the monetary policy outlook, whose press conference is scheduled at 05:30 GMT.

Meanwhile, the Japanese Yen (JPY) trades higher against its major peers on Tuesday, but weak Current Account data for June has raised concerns over its economic outlook.

On Monday, Japan’s Ministry of Finance (MoF) reported that the nation’s Current Account surprisingly slipped into deficit for the first time since January 2025. The deficit was at JPY 92.3 billion, while the data was expected to remain in surplus at JPY 1,512 billion. In May, the current account surplus was at JPY 3,968.3 billion.

Gold prices rose in India on Tuesday, according to data compiled by FXStreet.

The price for Gold stood at 13,549.95 Indian Rupees (INR) per gram, up compared with the INR 13,463.78 it cost on Monday.

The price for Gold increased to INR 158,050.20 per tola from INR 157,038.90 per tola a day earlier.

FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.

(An automation tool was used in creating this post.)

• EUR/JPY could find primary support at the nine-day EMA at 183.34.
• The 14-day Relative Strength Index at 47.63 indicates prevailing bearish bias.
• The initial barrier lies at the 50-day EMA at 184.57.

EUR/JPY depreciates after registering modest gains in the previous day, trading around 183.80 during the Asian hours on Tuesday. The Relative Strength Index (14) at 47.63 sits just below the neutral 50 line, hinting at ongoing bearish momentum without yet reaching oversold conditions.

The EUR/JPY cross is holding a mildly bearish near-term bias as it remains below the 50-day Exponential Moving Average (EMA) while it is positioned just above the nine-day EMA. This configuration suggests the cross is caught between short-term support and overhead trend resistance, with price action vulnerable to further downside while the longer EMA caps the topside.

The initial support lies at the nine-day EMA at 183.34. A successful break below the short-term moving average would reinforce the bearish bias and put downward pressure on the EUR/JPY cross to fall toward the eight-month low of 179.37, reached on August 3, followed by the nine-month low of 175.70.

On the upside, the EUR/JPY cross could rise toward the primary resistance at the 50-day EMA at 184.57. Further advances above the medium-term moving average would cause a bullish emergence and support the currency cross to explore the region around the all-time high of 187.95, which was recorded on April 17.

Markets edge toward BoJ tightening as hike odds firm into year-end

BNY’s Wee Khoon Chong notes that policy expectations have shifted meaningfully, with “markets now pricing in roughly a 50% chance of a 25bp BoJ hike in September and a full hike by year-end,” underscoring the growing conviction that the BoJ will move further away from its ultra-accommodative stance over the coming months.

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

• The British Pound trades firmly at around 1.3500 against the US Dollar.
• Investors await the US CPI data for July and the UK Q2 GDP data.
• The Fed is not expected to raise interest rates in September anymore.

The British Pound (GBP) holds onto two-day gains marginally at around 1.3500 against the US Dollar (USD) during the Asian trading session on Tuesday. The GBP/USD pair remains firm as the British Pound outperforms despite financial markets pricing out the possibility of an interest rate hike by the Bank of England (BoE) in the near term.

Strategists at Rabobank point out that “for the UK, the market is currently pricing in a reduced expectation of a rate hike by the end of the year,

This week, the major trigger for the British currency will be the preliminary United Kingdom (UK) Q2 and the June month Gross Domestic Product (GDP) data, which will be released on Thursday. In the April-June period, the UK economy is expected to have grown at a moderate pace of 0.4% vs. the previous reading of 0.6%. On a monthly basis, the GDP is seen contracting by 0.1%.

Meanwhile, the US Dollar Index (DXY) trades almost flat at press time, holding onto Monday’s recovery move at around 99.80. The USD Index is expected to remain sideways as investors await the United States (US) Consumer Price Index (CPI) data for July, which will be released on Wednesday.

US inflation seen firming but not reaccelerating in July

Brown Brothers Harriman’s Elias Haddad expects the upcoming US July CPI report to show inflation "firm modestly but stop short of signaling a renewed acceleration in inflation." He notes that "headline CPI is expected to rise +0.1% m/m vs. -0.4% in June and ease to 3.4% y/y vs. 3.5% in June," while "core CPI is expected to rise +0.2% m/m vs. 0.0% in June and ease to 2.5% y/y vs. 2.6% in June." The data are due Wednesday and, in Haddad’s view, should confirm a gradual cooling in underlying price pressures rather than a renewed upswing.

The US inflation data will have a significant impact on the Federal Reserve's (Fed) interest rate expectations, as the July monetary policy statement showed heightened concerns among policymakers toward upside inflation risks.

Lately, traders have priced out the possibility of a Fed interest rate hike in the September meeting after the release of weak US Nonfarm Payrolls (NFP) data for July.

GBP/USD Technical Analysis

In the daily chart, GBP/USD trades at 1.3500, retaining a bullish near-term tone as spot holds above the 60-day exponential moving average (EMA) at 1.3403 and the broken downward resistance trend line now offering support around 1.3456. The Relative Strength Index (14) at 61.1 leans into positive territory, suggesting buyers remain in control while momentum is not yet stretched into overbought conditions.

On the downside, immediate support emerges at the former trend-line cap turned floor near 1.3456, followed by the 60-day EMA at 1.3403, where a deeper pullback would be expected to attract fresh demand. As long as GBP/USD defends these layers of underlying support, the pair would likely continue to favor the topside, with bulls eyeing further gains above the recent 1.3509 close in the sessions ahead.

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