Forex News
The British Pound (GBP) has staged a broad-based rally across major currency pairs, hitting multi-month highs against both the US Dollar (USD) and the Euro (EUR). This surge is powered by a mix of diminishing domestic political risk, stronger-than-expected economic growth, and supportive technical flows.
With the political transition in Westminster pointing toward fiscal discipline and the UK rate market firmly pricing in additional Bank of England (BoE) rate hikes, the Pound has emerged as a standout G10 performer.
Lower political risk fuels Sterling outperformance
Fundamental analysts at MUFG highlight that the Pound's sudden strength is deeply tied to a declining UK political and fiscal risk premium. Speculation that Shabana Mahmood is poised to take over as Chancellor under Prime Minister-in-waiting Andy Burnham has reassured global investors of a commitment to sound public finances.
This view of political stability is backed by improving economic momentum. May's monthly GDP figures showed that the economy expanded 0.1%, raising Q2 growth forecasts to 0.3% and reinforcing bets of a better-than-expected performance for the UK economy in the first half of the year.
The paring back of the UK fiscal/political risk premium helped the pound to outperform over the past month (...) The UK rate market has moved to fully price back in a couple of BoE rate hikes in the year ahead.
GBP/USD poised for further technical gains
The strategy team at UOB notes that GBP/USD has burst through key resistance at 1.3445 to print a fresh two-month high of 1.3556. Although short-term conditions are deeply overbought (4-hour chart), indicating that the pace of the rally will likely slow down, the technical bias remains clearly tilted to the upside with no immediate signs of a trend pause.
The renewed upward momentum suggests that GBP has resumed its advance (...)The level to monitor is 1.3590. We will maintain a positive GBP stance as long as it holds above the ‘strong support’ level, currently at 1.3450.
Technical breakdown pushes EUR/GBP to a 0.84 handle
Societe Generale notes that the EUR/GBP cross has extended its decline after breaking below a Head and Shoulders neckline at 0.8610. The pair has slid to the 0.84 territory, its lowest level since June of last year.
While the scale of this move is technically overstretched and difficult to justify purely by bond yield spreads, thin market conditions and flows tied to institutional hedging or central bank reserve rebalancing have accelerated the drop.
Technically, next projections are located at 0.8435; the peak achieved earlier this week around 0.8545 may provide resistance should a brief rebound develop.
Banks anticipate a strong path for the Pound
The banks anticipate a strong near-term trajectory for the British Pound, though they advise caution as current levels are technically overextended. MUFG expects fundamental support to remain firm as fiscal de-risking and a resilient economy keep the BoE on a tightening path. UOB confirms that GBP/USD has officially resumed its broader advance, projecting a steady climb toward the 1.3590 resistance level in the weeks ahead, provided the pair remains securely above the 1.3450 support mark.
Meanwhile, Societe Generale warns that the EUR/GBP decline looks "stretched" and ripe for a minor, flow-driven technical bounce toward 0.8545. Still, the broader downward pressure should eventually carry the cross to technical targets near 0.8435 and the multi-year lows of 0.8350.
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Societe Generale highlights that USD/BRL has retreated to 5.07 after threatening 5.20 earlier in July, with the Brazilian Real (BRL) retaining a firm tone following soft United States (US) Producer Price Index (PPI) and lower Treasury yields. A second daily close below the 50-day moving average is seen as opening scope for a move back towards 5.00, helped by stronger retail sales and improving odds of President Lula retaining power.
Real supported by politics and data
"In LatAm, the BRL retains a firm tone after soft US PPI data yesterday deflated Treasury yields and curbed dollar strength. USD/BRL retreated to 5.07 after threatening to take out 5.20 earlier this month."
"The second daily close below the 50dma opens a potential move back towards 5.00, supported by improving odds of President Lula retaining power in the October presidential election. According to the latest Genial/Quaest survey, Lula’s lead over challenger Flavio Bolsonaro has widened to 8ppt (45% vs 37%) in a potential runoff scenario."
"The US share of Brazil’s trade has already fallen to a record low of 9.7% and, with many of the affected goods being essential commodities, the macroeconomic impact is likely to be limited. Politically, however, the tariffs may prove incrementally negative for Bolsonaro, who is generally viewed as being closer to Trump."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/GBP advances on Thursday, trading around 0.8485, up 0.24% on the day.
- UK GDP expands by 0.1% in May, in line with expectations, while Industrial Production disappoints.
- Hawkish comments from European Central Bank policymakers support the Euro.
EUR/GBP trades around 0.8485 on Thursday, up 0.24% at the time of writing, as investors digest a mixed batch of UK economic data and continued hawkish comments from European Central Bank (ECB) policymakers.
In the United Kingdom (UK), Gross Domestic Product (GDP) expanded by 0.1% MoM in May, matching market expectations after a 0.1% contraction in April. Meanwhile, Industrial Production declined by 0.5% MoM, missing forecasts, while Manufacturing Production rose by 0.1%. The data has only a limited impact on the British Pound (GBP), with traders remaining focused on the monetary policy outlook.
Money markets continue to fully price in a Bank of England (BoE) rate hike by the November meeting, as concerns that higher energy prices could fuel inflation reinforce expectations for a prolonged restrictive policy stance.
On the Euro (EUR) side, the shared currency remains supported by the cautious but hawkish tone from ECB officials. ECB President Christine Lagarde reiterated that policy decisions remain fully data-dependent, while Governing Council members Martin Kocher and Joachim Nagel stressed that the ECB stands ready to act if necessary to preserve price stability. These comments offset the unexpected contraction in Eurozone Industrial Production and continue to underpin the Euro.
According to Societe Generale, the recent decline in EUR/GBP now appears overstretched. Despite the cautious technical assessment, fundamental factors continue to support a resilient Euro against a British Pound that lacks fresh bullish catalysts following the latest UK macroeconomic releases.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.02% | 0.24% | -0.02% | -0.01% | 0.01% | -0.05% | 0.21% | |
| EUR | 0.02% | 0.25% | 0.00% | 0.02% | 0.11% | -0.03% | 0.23% | |
| GBP | -0.24% | -0.25% | -0.24% | -0.22% | -0.16% | -0.28% | -0.00% | |
| JPY | 0.02% | 0.00% | 0.24% | -0.01% | 0.10% | -0.04% | 0.23% | |
| CAD | 0.00% | -0.02% | 0.22% | 0.00% | 0.10% | -0.03% | 0.23% | |
| AUD | -0.01% | -0.11% | 0.16% | -0.10% | -0.10% | -0.11% | 0.13% | |
| NZD | 0.05% | 0.03% | 0.28% | 0.04% | 0.03% | 0.11% | 0.25% | |
| CHF | -0.21% | -0.23% | 0.00% | -0.23% | -0.23% | -0.13% | -0.25% |
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 Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
- AUD/USD consolidates gains at 0.7000 after rallying 1.25% over the last two days.
- Dollar weakness following soft US inflation figures is underpinning the Aussie's rally.
- The decline in Australian Consumer Inflation Expectations has failed to dent the Australian Dollar's bullish trend.
The Australian Dollar (AUD) trades practically flat against a weaker US Dollar (USD) on Thursday as investors pare back bets of immediate Fed tightening, following unexpectedly soft US inflation figures earlier in the week. The AUD/USD pair consolidates at 0.7000 at the time of writing, after rallying about 1.25% earlier this week.
US Producer Prices Index (PPI) data released on Wednesday showed that factory inflation contracted 0.3% in June, down from a 0.6% increase in May and below expectations of a 0% reading. The year-on-year PPI eased to 5.5% from 6% in the previous month, below the market consensus of 6.2%.
PPI data follows another contraction in the Consumer Price Index (CPI), which posted its largest monthly drop in nearly six years in June. Likewise, the yearly CPI slowed down to its lowest rate since March, at the beginning of the US-Iran war, and
These figures hint at a soft Personal Consumption Expenditures (PCE) Price Index report and have prompted investors to effectively rule out a Federal Reserve (Fed) rate hike in July and to cut back hopes of monetary tightening in September, sending the US Dollar lower across the board.
The Aussie Dollar, on the other hand, has remained resilient to the decline in Consumer Inflation Expectations, which fell to 4.7% in July, its lowest rate since January, from 5.5% in June. These figures have failed to clear the outlook for the Reserve Bank of Australia’s monetary policy, but they did not dent the Aussie's bullish trend either.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Citing four Iraqi oil and security sources, Reuters reported on Thursday that a drone crashed into an oil tanker in Iraq's Basra terminal, although no damage or fire was caused.
However, crude oil flows were suspended in all of Iraq's oil loading terminals after the incident, the sources said.
Market reaction
Despite these headlines, WTI - the US Oil benchmark - holds its retreat from the $80 mark, trading 0.96% lower on the day at $79 as of writing.
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.
Lee Hardman at MUFG highlights that the British Pound (GBP) has strengthened sharply, helped by reports that Shabana Mahmood is set to become the next UK chancellor, reinforcing expectations of “sound public finances” under Prime Minister in-waiting Andy Burnham. Reduced United Kingdom (UK) fiscal and political risk, alongside stronger-than-expected UK Gross Domestic Product (GDP) data, has supported Pound outperformance even as markets fully price in further Bank of England (BoE) rate hikes.
Lower risk premium and firmer UK growth
"The pound has continued to trade at stronger levels after strengthening sharply yesterday in response to media reports that Home Secretary Shabana Mahmood is set to become Britain’s next chancellor."
"The paring back of the UK fiscal/political risk premium helped the pound to outperform over the past month."
"EUR/GBP has fallen by around -2.5% since the high on 22nd June."
"The UK rate market has moved to fully price back in a couple of BoE rate hikes in the year ahead."
"There was also some good news for the pound this morning from the release of monthly UK GDP data for May which has raised our forecast for growth in Q2 up to 0.3% providing further evidence of stronger than expected growth in 1H of this year."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
ING strategists Francesco Pesole, Frantisek Taborsky and Chris Turner note the Dollar remains under pressure after softer US CPI and PPI data, with FX volatility declining and Brent around $85. They argue markets may keep one Federal Reserve hike priced for this year, allowing the Dollar to edge lower across most pairs as other central bank expectations adjust.
Soft inflation keeps Dollar pressured
"The dollar has remained under pressure, with FX volatility resuming its decline after a short-lived bounce earlier this week. Brent settling at around $85/bl is seemingly not enough to drive inflation expectations much higher, and the USD front-end continues to feel some gravitational pull from soft June CPI data. PPI was also rather muted yesterday: -0.3% MoM for headline, 0.2% MoM for core."
"At the same time, the two-day testimony by Fed Chair Kevin Warsh and a speech by Chris Waller are warning markets against reading too much into one single inflation print. According to Waller, the disinflationary trend must be visible over a few months to call off hikes. Hardly a guarantee now that oil prices have risen again."
"All in all, markets may remain content with one Fed hike priced in this year. As some other central bank pricing catches up on the upside, the dollar might still be inching lower in most crosses."
"US retail sales for June are published today, and are expected to grow at 0.2% MoM after four very strong months. The Fed’s Logan and Schmid (both hawks) are scheduled to speak."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Silver prices (XAG/USD) fell on Thursday, according to FXStreet data. Silver trades at $57.00 per troy ounce, down 1.34% from the $57.77 it cost on Wednesday.
Silver prices have decreased by 19.82% since the beginning of the year.
Unit measure | Silver Price Today in USD |
|---|---|
Troy Ounce | 57.00 |
1 Gram | 1.83 |
The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, stood at 70.78 on Thursday, up from 70.29 on Wednesday.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
(An automation tool was used in creating this post.)
- Euro holds ground despite the Eurozone trade balance swinging to a €7.8 billion deficit in May.
- Hawkish ECB comments supported the Euro, keeping rate hike expectations alive.
- The Canadian Dollar weakened as oil prices eased, despite rising supply concerns through the Strait of Hormuz.
EUR/CAD extends its gains for the second successive day, trading around 1.6100 during the European hours on Thursday. The currency cross remains stronger as the Euro (EUR) holds ground following the release of seasonally adjusted Eurozone Trade Balance data, which showed a deficit of €7.8 billion in May, swinging from the previous surplus of €1.3 billion.
The Austrian Central Bank Governor and ECB board member Marin Kocher said on Wednesday that he does not see second-round inflationary effects as of now, but that the bank is “ready to act” should that be necessary. At a later time, also on Wednesday, the Bundesbank President and also ECB member Joachim Nagel reiterated that, from the monetary policy perspective, it remains advisable to “act decisively” if needed.
The Euro finds support as hawkish ECB policymaker commentary offsets an unexpected contraction in May's Eurozone Industrial Production, keeping rate hike expectations alive for later this year. This resilience extended to the EUR/CAD cross, which gained traction as the commodity-linked Canadian Dollar weakened under the weight of falling crude prices.
Oil prices ease despite escalating US-Iran tensions and the growing risks to energy supplies moving through the vital Strait of Hormuz. Following a US strike on Iranian coastal defenses and missile sites on Wednesday, triggered by a newly reimposed naval blockade, Tehran warned it could halt regional energy exports, declaring that it is engaged in an "existential war" with the United States.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro 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 then its currency will gain in value 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.
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