Forex News

• Trump’s intervention cools Middle East fears, supporting equity risk appetite.
• JOLTS Job Openings jump reinforces US labor resilience before key services data.
• BoE hawks warn inflation battle may require faster action.

The Pound Sterling (GBP) rises by about 0.19% on Tuesday against the US Dollar (USD) as traders remain optimistic about a peace deal between the US and Iran despite ongoing geopolitical uncertainty. The GBP/USD pair trades at around 1.3470 after bouncing off daily lows of 1.3446.

GBP/USD gains as softer Oil offsets resilient US jobs data

The financial markets remain focused on geopolitics. The intervention by US President Donald Trump in the Israel-Hezbollah conflict tempered investors' fears, which are driving US equity markets to retest all-time highs. Therefore, Oil prices fell, as shown by the US crude Oil benchmark, the West Texas Intermediate (WTI), which was down 0.40% at $92.07.

Nevertheless, traders are still cautious due to the fragility of the ceasefire between the US and Iran.

Data from the US showed that the labor market remains resilient, as the Job Openings and Labor Turnover Survey (JOLTS) rose in April to its highest level in nearly two years. Vacancies rose to 7.618 million from 6.887 million in March, exceeding forecasts of 6.88 million. Worth noting that layoffs fell to 1.7 million, or 1.1%.

The data reassures Federal Reserve (Fed) policymakers of the solidity of the labor market. Cleveland Fed Beth Hammack said that “job data points to stability” and that the “unemployment rate is around full employment levels.” She remains highly concerned about inflation, saying that the Fed may need to act “soon” if inflation doesn’t abate.

Across the pond, Bank of England (BoE) policymakers crossed the wires. Megan Greene was hawkish, saying that she sees a growing case for rate hikes, saying that “the speed of the response is arguably just as important as its size.”

Earlier, Governor Andrew Bailey said the public must be confident that the central bank will drive inflation to its 2% target.

In the meantime, money markets had priced in a less hawkish BoE, with traders expecting the bank to hold borrowing costs steady at the June 18 meeting. However, towards the end of the year, investors had already priced in 40 basis points of easing, according to Prime Terminal data.

On Wednesday, the UK schedule will feature the BoE Monetary Policy Report Hearings. In the US, investors will eye Factory Orders, the ISM Services PMI, and the Fed’s Beige Book.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3475, holding a mildly bullish near-term bias as it remains above the latest triple simple moving average (SMA) proxy around 1.3449 and continues to respect the broader upward-support trend structure originating near 1.3159. The pair is still trading beneath the key downward resistance trend-line break area at 1.3600, suggesting upside is capped for now, while the 14-day Relative Strength Index, hovering just above 50 around 50.9, hints at modest but not overstretched bullish momentum.

On the downside, immediate support is seen around the 1.3475 area, with the clustered triple SMA support near 1.3449 reinforcing this nearby floor; a break below there would expose the upward trend-line break region at 1.3354, ahead of the more distant structural base drawn from the 1.3159 area. On the topside, initial resistance is defined by the downward resistance trend line around 1.3600, and a daily close above this barrier would be needed to reopen a more convincing advance in the broader uptrend.

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

Megan Greene, a member of the Bank of England's (BoE) Monetary Policy Committee (MPC), warned on Tuesday that United Kingdom (UK) households and businesses appear more sensitive to rising inflation than in the past, emphasizing that the risks of failing to act against persistent inflation outweigh the risks of tightening policy unnecessarily.

Key takeaways:

UK households and businesses are arguably more sensitive to increases in inflation than in previous periods.

In a scenario where energy prices generate stronger second-round inflation effects, Greene said interest rates may need to be raised.

Greene argued there is a benefit to acting sooner on rates, noting that the speed of the policy response can be just as important as its magnitude.

She said she places a relatively high weight on stabilizing prices compared with supporting economic output.

Greene added that the risk of acting against inflation, even if it proves less persistent, is less severe than the risk of failing to act.”

RaboResearch says Sweden’s weak Q1 GDP was driven by lower government spending but partly offset by household consumption and inventories. It argues that soft CPI and CPIF readings may understate underlying price pressures, especially as VAT cuts distort the data, while Riksbank minutes point to hawkish concern over upside inflation risks.

Soft data mask underlying inflation pressures

"The contraction in Swedish Q1 GDP was mostly due to a 2.1% q/q drop in government spending. The positive contribution due to inventory build-up is also a concern. That said, encouragingly household spending grew 0.6% q/q in Q1 with real disposable income increasing by 1.0% y/y."

"The Bloomberg survey also forecasts that Swedish CPI inflation will be just 0.8% y/y this year. The combination of softer Q1 GDP growth and CPI inflation on first look would appear to justify a steady policy outlook from the Riksbank. However, just as the breakdown of the GDP data is not as bad as the headline number suggests, price pressures in Sweden may be building at a faster pace than the official data indicate."

"The release of final April Swedish CPI inflation data confirmed a surprisingly soft reading of -0.1% y/y for the headline rate, flat for the ex-energy reading and 0.8% y/y for the CPIF inflation measure. The Bloomberg survey suggests that this is expected to rise to 1.3% y/y in May. The Riksbank targets CPIF inflation at 2%."

"Last September it was announced that the government would halve VAT on food products as part of its 2026 budget to reduce the impact of inflationary pressures on consumers. This followed some sticky CPI inflation readings last summer. The reduction in VAT on food took effect in April."

"While the data appeared to justify last month’s decision by the Riksbank to leave rates unchanged, the release of the minutes of the meeting contained some hawkish commentary. Deputy Governor Seim saw “significant upside risks to inflation going forward” due to the impact of the Iran war, though she favoured keeping rates on hold in May. In her view, “if the shock risks leading to wider and more persistent effects on inflation, we should restrain demand appropriately.”"

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

The National Bank of Poland (NBP) met the broad consensus among market participants and held interest rates steady, adopting a cautious tone on Tuesday, saying that future data would guide policy choices but also that inflation concerns are very much alive.

The central bank kept rates at 3.75%, but policymakers said the next measures would depend on how the economic outlook unfolds, leaving the bank firmly in wait-and-see mode for now.

In addition, the NBP cited a number of variables that might complicate the inflation picture, including fiscal policy, robust wage growth and laws impacting fuel costs, all of which could put consumer prices under upward pressure.

Furthermore, rate setters also said that the larger global environment remains a danger to the Polish economy, with increased geopolitical uncertainty being a significant factor for holding rates.

One interesting inclusion was the NBP’s reminder that it remains prepared to intervene in the FX market if necessary, a signal that policymakers are keeping a close watch on Zloty (PLN) volatility.

FX impact: The Polish currency gathers some pace following the bank’s decision, enough to prompt EUR/PLN to leave the area of daily highs near 4.2370 and slip back to the 4.2340 zone, just below its key 200-day SMA.

Bottom line: The NBP is in no rush to signal its next move. While rates remain unchanged, policymakers continue to see inflation risks on the horizon and appear determined to retain maximum flexibility as they assess incoming data and an increasingly uncertain geopolitical environment.

Scotiabank's strategists Shaun Osborne and Eric Theoret notes the Canadian Dollar (CAD) is underperforming into renewed United States (US)‑Canada trade talks, with USD/CAD trading in the mid‑1.38s. Domestic data have been limited, while US‑Canada spreads are stabilizing and fair value has risen toward 1.3741. Short‑term technicals point to bullish momentum within a 1.3800–1.3900 range.

Loonie soft as trade talks resume

"The CAD is soft vs. the USD and underperforming all of the G10 currencies into Tuesday’s NA session. Indications of growth in April."

"Domestic developments have been limited, and Monday’s comments from the BoC’s Rogers were constructive as she highlighted the need to look through the weak Q1 GDP release and consider the stronger in dications of growth in April."

"These are the first meetings in the aftermath of last week’s New York speech from PM Carney in which he struck a much more conciliatory tone. Fundamentally, US-Canada spreads are showing signs of stabilization and offering the CAD some modest support."

"Reversals are well correlated to spot, and the rising premium for protection against USD/CAD upside (CAD weakness) is notable. Our FV estimate for USD/CAD continues to climb, and is currently at 1.3741. "

"Neutral/bullish—USD/CAD’s latest recovery is notable, and Monday’s gains are extending into the mid-1.38s. Momentum is bullish and strengthening as the RSI climbs into the mid-60s. We see limited resistance ahead of the psychologically important 1.3900 level and look to a near-term range bound between 1.3800 and 1.3900."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

ING economists Peter Virovacz and Zoltán Homolya say Hungary’s latest GDP data show the economy emerging from stagnation, but they stress that much of the recent strength reflects temporary pre-election factors. They project Hungarian GDP growth of 1.5% in 2026, with consumption as the main driver, modest investment and net exports weighing on overall expansion.

Temporary drivers support fragile recovery

"Hungary’s growth picked up in the first quarter, but much of the strength appears driven by temporary, pre-election factors rather than a clear, sustained recovery. Our latest economic growth forecast for 2026 projects a 1.5% increase. This generally gloomy outlook is partly due to the impact of the energy price shock, and partly due to the fading of the one-off factors seen in the first quarter."

"Based on the detailed data, the outlook for the Hungarian economy has not changed much. A number of specific positive factors are emerging that are behind the strong economic performance. Whether the surge in consumption proves sustainable depends on how long the 'honeymoon period' lasts."

"However, the review and temporary suspension of certain public investments by the previous administration could lead to a downturn in the short term, before investment activity begins to pick up towards the end of the year. Moreover, export growth may be limited by geopolitical uncertainty, rising production costs and potential supply chain issues due to the effective closure of the Strait."

"Based on year-on-year indices, domestic demand increased significantly in the first quarter of 2026, while exports continued to shrink and imports grew substantially. In other words, the structure of economic growth has not changed compared to recent quarters; it has simply become more imbalanced."

"Net exports alone slowed the economy’s year-on-year performance by 4.5ppt, a figure offset by a 6.2ppt contribution from domestic demand. Consumption and inventory accumulation provided nearly equal contributions as drivers of growth."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

DBS Group Research strategist Eugene Leow warns that low Oil inventories, especially in the United States, could keep Oil prices and global yields supported even if a US-Iran deal reopens the Strait of Hormuz. He notes that recent optimism has pushed Oil and Treasury yields lower, but the ongoing drawdown in crude stocks and Strategic Petroleum Reserves remains a concern for inflation.

Inventory risks after Middle East disruption

"We are growing increasingly wary of the oil inventory drawdown over the past few months and the consequences if market participants suddenly decide that oil prices should be much higher even if the US-Iran conflict ends."

"To recap, peak market stresses occurred in late March and this is represented by the significant physical premium for crude."

"Over the past few weeks, market participants were also increasingly optimistic that a deal between US and Iran can be reached, allowing the Strait of Hormuz to reopen."

"Accordingly, investors brought oil prices and Treasury yields lower as immediate term inflation concerns ease."

"In the best case scenario where a meaningful amount of energy traffic resumes in the coming weeks, we think that the rebuild of inventories across many countries will mean that oil prices will be supported for some time."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Commerzbank’s Dr. Vincent Stamer argues persistent Euro area inflation above 3% and rising core pressures make an European Central Bank (ECB) rate increase unavoidable. He cites firms’ intentions to pass on higher energy costs and elevated consumer inflation expectations. Stamer expects a 0.25 percentage point hike next week, followed by another increase in the third quarter.

Higher inflation drives tightening call

"Unless there is a significant change in the situation in the Persian Gulf soon, inflation is now likely to settle at just over 3%. The core rate could even rise significantly in the second half of the year due to indirect effects of high energy prices."

"Surveys such as the euro area Purchasing Managers’ Index show that companies, particularly in the manufacturing sector, intend to pass on high costs to the consumer."

"And according to the ECB, consumers’ inflation expectations for the three years ahead have also stabilized at the elevated level of 3%."

"At its meeting next week, the ECB is therefore highly likely to raise key interest rates by 0.25 percentage points."

"Another rate hike in the third quarter is also likely to follow."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• US Job Openings rose in April to 7.618 million, way above the 6.88 million expected.
• DXY trades near 99.20 following a brief spike after the release of US JOLTS data.

The number of job openings in the United States (US) came in at 7.618 million in April, up sharply from the revised 6.887 million in March, the US Bureau of Labor Statistics (BLS) reported in its Job Openings & Labor Turnover (JOLTS) report on Tuesday. This reading came in above the market expectation of 6.88 million and marks the highest level of job openings since May 2024.

"Over the month, hires decreased to 5.1 million, and total separations decreased to 5 million," the BLS noted in its press release. "Within separations, quits (3 million) were little changed while layoffs and discharges (1.7 million) were also little changed."

What do US Job Opening figures mean for the US Dollar?

The US Dollar Index (DXY) jumped temporarily toward the 99.20 price zone following the release of US data, but trimmed some of these gains afterward. On the day, the DXY was broadly steady.

Why is the US Dollar broadly ignoring the upbeat employment data? The sharp increase in Job Openings signals a recovery in demand for workers, which is positive for the US economy and the US Dollar. However, the job openings data is a lagging indicator (the data refers to April), and markets tend to focus on more updated indicators.