Forex News
- GBP/USD holds above the 50-day, 100-day and 200-day SMAs, supporting the bullish outlook.
- Positive RSI and MACD readings show that buyers retain control.
- The 1.3600 psychological mark acts as the next immediate hurdle for buyers.
GBP/USD edges higher on Monday as fading expectations of an imminent Federal Reserve (Fed) rate hike drag the US Dollar (USD) lower and lift the British Pound (GBP) to its highest level since May 12. At the time of writing, the pair trades around 1.3555, building on its late-July recovery after clearing several key moving averages.
The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 99.45 after touching 99.30, its lowest level since June 5.
Strategists at UOB Group concede that their recent shift to a neutral stance on GBP was “premature,” after the Pound “rose sharply, breaking above the major resistance at 1.3555 (high was 1.3561).” The subsequent topside break, while “not as decisive” as they would have preferred, is nonetheless “sufficient to indicate that the upward bias remains intact,” though UOB cautions that “any advance is expected to face firm resistance at 1.3600.” In their one to three-week horizon, they now judge that “only a breach of 1.3495 (‘strong support’ level) would indicate that GBP is not ready to move toward 1.3600.”
From a technical perspective, GBP/USD maintains a bullish bias as the pair holds above the 50-day, 100-day and 200-day Simple Moving Averages (SMAs).
The Relative Strength Index (RSI) on the daily chart stands at 64.9, showing firm bullish momentum without entering overbought territory. The Moving Average Convergence Divergence (MACD) indicator remains in positive territory, suggesting that buyers retain control of the near-term direction.
Meanwhile, the Average Directional Index (ADX) at 27.6 indicates that the underlying uptrend is gaining strength, supporting the constructive outlook while the pair holds above the moving-average cluster.
On the upside, immediate resistance is located at the 1.3600 psychological mark, followed by 1.3700. A sustained break above 1.3700 could open the door to a test of 1.3850, this year’s high.
On the downside, the 1.3500 psychological level offers initial support. The next demand zone lies between 1.3417 and 1.3378, where the key moving averages are clustered. A deeper correction could expose 1.3300, followed by 1.3150.
(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.
Rabobank's Senior FX Strategist Jane Foley highlights that the Norwegian Krone (NOK) is the strongest G10 currency across multiple horizons, supported by Oil prices, above-target inflation and a hawkish Norges Bank. Norway’s role as Europe’s largest energy exporter and resilient domestic demand underpin NOK. Foley expects EUR/NOK to drift lower and has cut its 3‑month target to 10.80, with a 12‑month view near 10.50.
NOK strength backed by policy and energy
"We continue to see scope for a gentle move lower in EUR/NOK towards 10.50 on a 12-month view."
"Currently market rates imply little risk of a rate hike next month, though these odds will be impacted by the release of August CPI inflation data on September 10."
"Given speculation that the Iran war could drag on and in view of the potential for the Norges Bank to hike rates again, we continue to favour buying NOK vs. the EUR and have lowered our 3-month target to 10.80 from 10.90."
"The NOK remains the best performing G10 currency in the year to date, half year to date, over the past month and over the last 5 trading sessions, though EUR/NOK remains above its spring lows."
"Expectations that further policy is in the pipeline and Norway’s position as Europe’s biggest energy exporter are currency supportive factors."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
BNY’s Geoff Yu notes that India’s bonds sold off after the Reserve Bank of India (RBI) unexpectedly advanced closure of its special Dollar deposit window to end-August. The change reduces anticipated Indian Rupee (INR) liquidity, lifts 5-year and 10-year yields, and may slow reserve accumulation and Rupee appreciation as authorities grow wary of future liabilities and forward-premium costs.
Early window closure hits bonds
"India’s bond market sold off after the Reserve Bank of India (RBI) unexpectedly brought forward the closure of its special dollar deposit window for overseas residents, reducing the amount of rupee liquidity investors had expected to enter the system."
"The facility, which has already attracted more than $50bn, will now close at the end of August rather than a month later. 5y yields rose as much as 9bp to 6.44%, while the 10y yield climbed 4bp to 6.80%."
"The earlier closure could also slow further reserve accumulation and limit rupee appreciation after reserves rose above $700bn."
"The move suggests the RBI is becoming more sensitive to the future liability and forward-premium costs associated with sustaining the scheme."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Societe Generale economists Reo Sakida and Jin Kenzaki say Japan’s 2Q GDP data were weaker than expected, with consumption and capex both disappointing. A higher GDP deflator may support near-term BoJ hike expectations, but persistent weakness in private demand could challenge a faster and higher rate path and worsen the debt/GDP ratio through front‑loaded fiscal spending relative to private investment.
Weak demand complicates BoJ hiking outlook
"Headline growth missed consensus, with consumption and capex—the two drivers we had expected to support growth—both disappointing."
"The higher GDP deflator should support near-term BoJ hike expectations, but if weakness in consumption and capex continues, it would raise concerns over a faster and higher hiking path."
"Continued services weakness would flash a yellow light for the BoJ."
"One implication for Takaichi’s investment-focused policy is that fiscal spending could come through well before private investment and potential growth respond, temporarily worsening the debt/GDP ratio—a negative for JGBs."
"This is an important component to watch, as sustained weakness in services consumption would raise a warning flag for the BoJ’s faster and higher rate-hike path."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/JPY crawls above 184.50 with the Yen weighed down by downbeat Japanese GDP data.
- Japanese economy grew at a 0.3% pace in Q2, from 0.5% in the first three months of the year.
- The sluggish domestic demand might reactivate Japan's fiscal concerns, according to BBH experts.
The Euro (EUR) crawls higher for the third consecutive day on Monday, against a weak Yen (JPY), weighed down by downbeat Japanese Gross Domestic Product (GDP) figures. The EUR/JPY pair confirmed the breach of the 50% retracement of the late July sell-off, trading at the 184.50 area at the time of writing, with the resistance area around 185.00 coming closer.
The Japanese Cabinet Office revealed earlier on Monday that the country’s economic growth slowed down to 0.3% in the second quarter, against the market consensus of a steady 0.5% reading. Year-on-year, the Japanese economy decelerated to a 1.1% growth, from 1.8% in the previous quarter, instead of the 2.0% rise anticipated by market analysts.
Economists at Brown Brothers Harriman note that Japan’s latest activity data underscores a softer growth pulse than markets had anticipated. BBH highlights that “private consumption was flat, while private non-residential investment shaved -0.2ppt off growth.” “The sluggish domestic demand activity will do little to ease Japan’s fiscal concerns, a major headwind for JPY.” Said the BBH experts in a note.
Technical Analysts: In a bullish trend, aiming for the 185.00 area
EUR/JPY trades at 184.54, with price action holding comfortably above an ascending trendline from late July lows, and momentum indicators reflecting growing upside traction. The daily Relative Strength Index (RSI) around 52 signals neutral-to-positive momentum, and the Moving Average Convergence Divergence (MACD) has turned increasingly positive, hinting that bullish pressure is rebuilding after a consolidating phase last week.
Bulls are likely to meet significant resistance at the area between the 61.8% Fibonacci retracement of July's decline, at 184.82, and the July 31 high, at 185.17. Beyond here, the next upside target is the July 27 and 28 lows and the 78.2% Fibonacci retracement, near 186.00
On the downside, immediate support is seen at the confluence of the 200-day SMA and the 50% retracement of the previously mentioned decline, just under 184.00. If these levels are broken, the focus will shift towards the Fibonacci cushions at 183.15, which held bears on August 12.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.17% | -0.16% | -0.03% | -0.09% | -0.59% | -0.45% | -0.38% | |
| EUR | 0.17% | -0.01% | 0.13% | 0.07% | -0.39% | -0.25% | -0.21% | |
| GBP | 0.16% | 0.00% | 0.13% | 0.07% | -0.37% | -0.27% | -0.20% | |
| JPY | 0.03% | -0.13% | -0.13% | -0.05% | -0.54% | -0.40% | -0.32% | |
| CAD | 0.09% | -0.07% | -0.07% | 0.05% | -0.49% | -0.36% | -0.29% | |
| AUD | 0.59% | 0.39% | 0.37% | 0.54% | 0.49% | 0.13% | 0.15% | |
| NZD | 0.45% | 0.25% | 0.27% | 0.40% | 0.36% | -0.13% | 0.07% | |
| CHF | 0.38% | 0.21% | 0.20% | 0.32% | 0.29% | -0.15% | -0.07% |
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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
A large majority of economists expect the Federal Reserve (Fed) to keep interest rates unchanged in September and for the rest of this year, according to a Reuters poll conducted between August 12 and 17.
The poll showed that 94 of 104 economists expect the Fed to leave its benchmark rate unchanged at 3.50%-3.75% at the September 15-16 meeting, broadly in line with last month’s survey. Nearly 80% of respondents, or 80 economists, forecast no change in interest rates through the end of the year.
Poll medians also suggest that rates will remain at current levels through the end of 2027.
Economists expect Personal Consumption Expenditures (PCE) inflation to average 3.5% this year, unchanged from last month’s forecast. Inflation is expected to stay above the Fed’s 2% target until at least 2028, according to the poll medians.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Philip Wee of DBS Group Research notes that markets still focus on Japan’s struggle to support the Japanese Yen, while underplaying broader USD implications. He stresses that Washington’s stance gives Tokyo political cover to keep intervention on the table and warns that further operations in USD/JPY cannot be ruled out around or above the pivotal 160 level.
Tokyo retains cover for renewed action
"Markets should not misread US Treasury Secretary Scott Bessent’s request to the Fed to expand the Foreign and International Monetary Authorities (FIMA) Repo Facility from the current limit of $60 billion per counterparty borrowing limit for a JPY-negative development."
"Washington recognised Tokyo’s increasingly determined and coordinated efforts to defend the JPY, with unwanted spillovers into the US bond market."
"By publicly keeping the door open to another coordinated operation, Bessent has given Tokyo the political cover to make it costly for JPY bears to hold their short JPY positions."
"Despite USD/JPY’s recovery from its 155 low on August 3 to 159 last week, the JPY is still 2.5% stronger from its pre-intervention levels."
"Markets cannot rule out more interventions in USD/JPY around or above the pivotal 160 level."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/CAD declines by 0.11% on Monday as expectations of higher interest rates in the United States ease.
- Canadian inflation for July is expected to accelerate to 2.9% YoY, potentially reinforcing the BoC’s cautious stance.
- Canadian inflation data could shape expectations for the Bank of Canada’s next monetary policy decision.
USD/CAD trades around 1.3860 on Monday at the time of writing, down 0.11% on the day. The pair extends its decline as the US Dollar (USD) remains under pressure against the Canadian Dollar (CAD), with investors scaling back expectations of further monetary tightening by the Federal Reserve (Fed). Attention now turns to Canada’s July inflation data, due later on Monday.
The recent weakening of the US Dollar follows a series of disappointing US economic releases, including an unexpected decline in Retail Sales. Signs of slowing economic activity and softer underlying inflation are reducing the likelihood of an imminent Fed rate hike. According to the CME FedWatch tool, markets now price in around a 30% chance of a rate increase at the next meeting, down from nearly 40% a week earlier.
On the Canadian side, investors await the release of the July Consumer Price Index (CPI). Headline inflation is expected to rise 2.9% YoY, following a 2.8% increase in June, while prices are forecast to advance 0.7% on a monthly basis.
An acceleration in price pressures could reinforce the Bank of Canada’s (BoC) wait-and-see approach. At its July meeting, the central bank kept its policy rate unchanged at 2.25% for the sixth consecutive meeting. BoC Governor Tiff Macklem said the central bank could look through short-term energy shocks while stressing that it would not allow higher energy prices to translate into persistent inflation.
Canada CPI in focus as USD/CAD tests 200-day support and BoC core gauges stay subdued
Strategists at Brown Brothers Harriman note that "USD/CAD is eyeing key support at the 200-day moving average (1.3849)" ahead of the Canada July CPI release at "1:30pm London, 8:30am New York." BBH expects "headline CPI is seen at 2.9% y/y vs. 2.8% in June (BoC Q3 forecast: 2.5%), core CPI (ex. food & energy) is expected at 1.8% y/y vs. 1.8% in June, and core CPI (average of trim and median) is projected at 1.85% for a second straight month (BoC Q3 forecast: 2.0%)." They argue that "Canada’s favorable growth-inflation mix bodes well for CAD. However, the negative output gap leaves room for markets to trim BoC rate hike bets (67bps in the next twelve months), limiting CAD upside."
According to TD Securities, the inflation data should show only a modest firming, as they "look for headline CPI to firm by 0.1pp to 2.9% y/y in July as prices rise by 0.4% m/m on positive contributions from food and energy products, as travel services provide an offset." TD adds that "CPI-trim/median are forecast to hold stable at 1.85% y/y which would leave core CPI tracking below BoC projections from the July MPR and allow the Bank to keep looking through higher oil prices in September." On activity, TD highlights that "manufacturing sales rose by 0.1% m/m in June, just above the market consensus for -0.1% (TD: -0.4%) despite the large drag from lower energy prices," and that "excluding refineries, manufacturing sales rose by 2.6% m/m on broad strength with growth across 15 of 21 subindustries."
USD/CAD technical analysis
In the one-hour chart, USD/CAD trades at 1.3860, maintaining a bearish near-term bias as it holds beneath a descending trend-line resistance around 1.3913 and the 100-hour simple moving average (SMA) at 1.3915. The pair also trades well below the 200-hour SMA at 1.3955, reinforcing a capped tone, while the Relative Strength Index (RSI) hovers just above oversold territory near 31, hinting that downside pressure persists but is becoming stretched.
On the topside, initial resistance is located at the downtrend line near 1.3913, closely followed by the 100-hour SMA at 1.3915, forming a nearby supply cluster; a sustained break above this band would expose the higher barrier at the 200-hour SMA around 1.3955. In the absence of clearly defined support levels from the current dataset, the recent lows just under the market remain the nearest reference on the downside, and the bearish outlook is likely to prevail while price trades below the 1.39 area and the cited moving averages.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Commerzbank’s Dr. Henry Hao highlights that China’s July activity data undershot expectations across industrial output, retail sales and fixed-asset investment, reflecting weather disruptions and a deepening property slump. Exports remain a relative bright spot, but H2 Gross Domestic Product (GDP) growth is now seen as fragile and below target, increasing pressure on Beijing to deliver more meaningful fiscal and monetary support in the coming months.
Weak data heighten policy support pressure
"China's July activity data missed consensus across every major indicator, confirming that the economy's second-half recovery is off to a fragile start."
"Persistent consumer caution and sub-target GDP growth are intensifying pressure on Beijing to deploy more substantive fiscal and monetary support in H2."
"The July data miss raises the stakes for Beijing's policy response in the months ahead."
"With the year-to-date GDP growth trajectory running below the official target range, a sustained H2 recovery is now a prerequisite for meeting the full-year goal."
"Whether that calibrated approach proves sufficient given the scale of the demand shortfall will be the defining policy question for Q3."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Forex Market News
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