Forex News
- The US Dollar Index heads for its first weekly gain in three weeks, supported by higher Treasury yields, strong US inflation data, and geopolitical tensions in the Middle East.
- Technically, DXY maintains a constructive near-term tone after reclaiming its key moving averages.
- Key support levels are seen at the 50-day SMA near 99.00 and the 100-day SMA around 98.48.
The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, extends its rally on Friday, climbing to its highest level since April 8 as investors continue to favor the US Dollar (USD) amid hawkish Federal Reserve (Fed) expectations and persistent geopolitical uncertainty surrounding US-Iran negotiations.
At the time of writing, the DXY trades around 99.20, putting the index on track for its first weekly gain in three weeks. The advance comes as traders reassess the US inflation outlook following another sharp rise in both Consumer Price Index (CPI) and Producer Price Index (PPI) data released earlier this week, marking the second straight month of accelerating inflation in April.
Higher Oil prices linked to tensions in the Middle East remain a key driver of inflation. Following the latest inflation data, traders have increased bets that the Fed could raise interest rates by the end of the year, with the CME FedWatch Tool showing nearly a 50% probability of a rate hike at the December meeting.
Mounting inflation risks and tighter monetary policy expectations push US Treasury yields higher, with the benchmark 10-year Treasury yield hovering near one-year highs and supporting the US Dollar’s upward momentum.
The Greenback also finds additional support from a positive meeting between US President Donald Trump and Chinese President Xi Jinping, where both leaders discussed trade and stronger investment ties between the two countries.
Meanwhile, safe-haven demand for the Greenback remains firm as uncertainty over US-Iran nuclear negotiations persists, with President Donald Trump reiterating threats to resume military action if no agreement is reached.
Technical Analysis:
On the daily chart, the Dollar Index is extending its recovery above its main moving averages and reinforcing a constructive near-term bias. The 50-day Simple Moving Average (SMA) at 99.00 now underpins the advance, with the 100-day SMA at 98.48 offering a deeper layer of trend support.
Momentum conditions back the topside tone, as the Relative Strength Index (14) at 58.67 pushes further into positive territory and the Moving Average Convergence Divergence (MACD) turns more firmly positive above the zero line.
On the topside, initial resistance is located at 100.00, with a break there exposing the next hurdle at 100.50. On the downside, immediate support is provided by the 50-day SMA at 99.00, ahead of the 100-day SMA at 98.48; a deeper pullback would look to the horizontal floor near 97.75 as the next notable demand area.
(The technical analysis of this story was written with the help of an AI tool.)
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.
ING economists Deepali Bhargava, Lynn Song and Min Joo Kang expect Bank Indonesia (BI) to shift toward a tighter stance at its upcoming meeting. They highlight recent Indonesian Rupiah weakness, ongoing FX intervention and wider rate differentials versus the United States. With currency stability still the main priority, they anticipate a 25 basis point policy rate increase this week.
Rupiah weakness pushes BI toward tightening
"Much has changed since Bank Indonesia’s last monetary policy meeting, when BI left rates unchanged and refrained from signalling a more hawkish stance."
"Since then, the IDR has depreciated by over 1.5%, despite active BI intervention in FX markets to contain currency pressures."
"At the same time, expectations for Federal Reserve rate cuts have shifted amid resilient US macro data, further widening rate differentials unfavourably for the IDR."
"Given BI’s continued emphasis on currency stability, we expect the central bank to pivot toward tightening and deliver a 25 bp rate hike at Wednesday’s meeting."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- EUR/GBP climbs toward one-month highs as UK political turmoil weighs on the Pound.
- UK gilt yields surge to multi-year highs as investors react to mounting political uncertainty.
- Traders price in at least two BoE and ECB rate hikes as rising Oil prices fuel inflation concerns.
EUR/GBP climbs to near one-month highs on Friday as rising political uncertainty in the United Kingdom (UK) pressures the British Pound (GBP). At the time of writing, the cross is trading around 0.8726, on track for weekly gains.
Sterling came under renewed pressure as speculation surrounding a possible leadership challenge to UK Prime Minister Keir Starmer intensified following the Labour Party's heavy local election losses. According to The Times, the Labour Party panel approved Greater Manchester Mayor Andy Burnham’s bid to return to Parliament, putting another key contender alongside Wes Streeting in the spotlight as pressure mounts on Starmer.
Burnham is seen as less market-friendly, with investors worried his leadership could lead to higher government spending and borrowing. Streeting, meanwhile, is viewed as a safer option for markets.
The political uncertainty also triggered sharp moves in the UK bond market, with UK 10-year gilt yields climbing toward 5.2% on Friday, their highest level since July 2008, as investors grew increasingly concerned about the UK’s fiscal credibility.
Alongside political developments, investors are also closely watching the monetary policy outlook as rising Oil-driven inflation linked to tensions in the Middle East raises the risk that major central banks may need to increase interest rates. Traders are currently pricing in at least two rate hikes from both the Bank of England (BoE) and the European Central Bank (ECB) by year-end.
However, the Euro (EUR) could face headwinds as higher energy prices and the Eurozone’s dependence on imported energy increase the risk of slower economic growth, potentially limiting how aggressively the ECB can raise interest rates even if inflation pressures continue to rise.
Looking ahead, investors will closely monitor next week’s key economic data releases, including inflation figures from both the United Kingdom and the Eurozone, along with UK employment data for the three months ending in March.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.30% | 0.51% | 0.17% | 0.11% | 0.83% | 1.07% | 0.31% | |
| EUR | -0.30% | 0.20% | -0.13% | -0.21% | 0.52% | 0.79% | 0.01% | |
| GBP | -0.51% | -0.20% | -0.32% | -0.40% | 0.32% | 0.58% | -0.19% | |
| JPY | -0.17% | 0.13% | 0.32% | -0.07% | 0.64% | 0.90% | 0.13% | |
| CAD | -0.11% | 0.21% | 0.40% | 0.07% | 0.69% | 0.94% | 0.20% | |
| AUD | -0.83% | -0.52% | -0.32% | -0.64% | -0.69% | 0.26% | -0.51% | |
| NZD | -1.07% | -0.79% | -0.58% | -0.90% | -0.94% | -0.26% | -0.76% | |
| CHF | -0.31% | -0.01% | 0.19% | -0.13% | -0.20% | 0.51% | 0.76% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
- Political turmoil fuels fears that Starmer’s successor may widen deficits.
- WTI rally boosts the US Dollar as Iran tensions revive inflation risks.
- Strong US production data reinforces hawkish Fed repricing.
The GBP/USD pair extends on Friday its losses for the fourth straight day, poised to finish the week down more than 2% as political turmoil in the UK and increased speculation that Prime Minister Keir Starmer’s successor could widen fiscal deficits weigh on the currency. At the time of writing, GBP/USD trades at 1.3343, its lowest level since April 8.
GBP/USD drops as Starmer pressure and Oil shock deepen
Risk aversion dominates the financial market as US President Donald Trump said that he is not happy with Iran. “I am not going to be much more patient,” he added, pressuring Tehran to make a deal.
The US crude Oil benchmark, West Texas Intermediate (WTI), extended its gains by more than 2.39%, while the Greenback —positively correlated to WTI—surged to 99.29, according to the US Dollar Index (DXY), up by 0.39% in the day.
However, the story is that the Iran conflict is underpinning energy prices. Consequently, global bond yields are soaring amid speculation that major central banks, including the Federal Reserve, will begin to tighten monetary policy.
Prime Terminal data shows growing expectations that the Federal Reserve will raise rates in 2026, with the probability of a hike by year-end now at 50%.
Data from the US showed that Industrial Production improved in April, rising 0.7% MoM, exceeding estimates of 0.3% and March’s -0.3% contraction.
In the UK, political turmoil keeps Prime Minister Keir Starmer on the ropes as his health minister, Wes Streeting, resigned, while others are positioning to challenge his leadership.
Reuters revealed that Greater Manchester Mayor Andy Burnham “has been offered a path for a possible leadership challenge after another Labour lawmaker said he would resign his parliamentary seat.”
Next week, the UK economic schedule will feature jobs, inflation, flash PMIs and Retail Sales data, along with speeches by members of the Bank of England (BoE). In the US, traders are awaiting housing and jobs data, as well as Federal Reserve speakers.
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 1.08% | 1.77% | 1.35% | 0.56% | 1.05% | 1.72% | 1.21% | |
| EUR | -1.08% | 0.66% | 0.31% | -0.54% | -0.04% | 0.61% | 0.11% | |
| GBP | -1.77% | -0.66% | -0.85% | -1.21% | -0.73% | -0.05% | -0.55% | |
| JPY | -1.35% | -0.31% | 0.85% | -0.84% | -0.31% | 0.36% | -0.11% | |
| CAD | -0.56% | 0.54% | 1.21% | 0.84% | 0.57% | 1.20% | 0.64% | |
| AUD | -1.05% | 0.04% | 0.73% | 0.31% | -0.57% | 0.66% | 0.16% | |
| NZD | -1.72% | -0.61% | 0.05% | -0.36% | -1.20% | -0.66% | -0.51% | |
| CHF | -1.21% | -0.11% | 0.55% | 0.11% | -0.64% | -0.16% | 0.51% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
GBP/USD Price Forecast: Technical outlook
In the daily chart, GBP/USD trades at 1.3320, keeping a bearish near-term tone as spot holds beneath a dense cluster of the 50-, 100- and 200-day Simple Moving Averages (SMAs) grouped around 1.3430. The pair has slipped away from the prior break zone of the downward resistance trend line near 1.3616, while the Relative Strength Index (14) at about 37 points to building downside momentum rather than a completed oversold condition, suggesting sellers still retain control.
On the topside, initial resistance is defined by the converging 50-, 100- and 200-day SMAs around 1.3430, and a sustained recovery above this cluster would be needed to ease immediate downside pressure, exposing the former break area of the descending trend line near 1.3616. Absent a daily close back over these barriers, any rebounds are likely to be treated as corrective within the broader decline from recent highs.
(The technical analysis of this story was written with the help of an AI tool.)
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.
- WTI Oil climbs above the psychological $100 level after Donald Trump says China will buy US crude.
- The Trump-Xi summit ends without any concrete plan to reopen the Strait of Hormuz.
- Persistent concerns over global supply continue to support Oil prices.
West Texas Intermediate (WTI) US Oil extends its rally on Friday, with the US benchmark trading around $100.90 at the time of writing, up 3.13% on the day and breaking above the $100 level to reach a fresh weekly high. Markets are reacting to comments from US President Donald Trump, who said that China agreed to buy US Oil following his summit with Chinese President Xi Jinping.
The two-day Trump-Xi meeting concluded on Friday without any major announcement regarding the reopening of the Strait of Hormuz, a strategic route for global Oil exports. Donald Trump nevertheless stated that Beijing had committed to participating in the reopening of the critical waterway, without providing further operational details.
Trump’s comments regarding future Chinese purchases of US Oil were enough to trigger a fresh wave of buying in the Oil market. Chinese authorities have not yet officially confirmed such an agreement, but investors are favoring a scenario of potentially stronger global demand.
Tensions surrounding the Strait of Hormuz also continue to fuel concerns about global Oil supply. Rabobank analysts note that even a temporary closure of the strait would trigger a significant increase in energy prices, while a prolonged disruption could force demand reductions across several industrial sectors.
Rabobank explains that in a scenario where the strait remains closed for several months, Europe could avoid physical shortages through price adjustments. However, a disruption lasting close to one year would eventually deplete available buffers and heavily impact sectors such as aviation, logistics and industries dependent on air freight.
The geopolitical backdrop, therefore, remains a major driver for higher Oil prices, as traders continue to monitor any developments regarding Middle East energy flows and trade relations between Washington and Beijing.
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.
TD Securities’ James Rossiter and Julie Ioffe argue that Prime Minister Starmer is likely to be replaced by late September, with Labour’s leadership race centering on Burnham, Streeting, Rayner and Miliband. They expect Labour to shift left over time, with higher spending and taxes, possible defence-rule carve‑outs, but no early general election before at least 2028.
Starmer exit path and Labour policy mix
"Our long-held base case view that PM Starmer would be replaced this summer is now playing out. Candidates are lining themselves up for a leadership race, likely to be launched in late June. It's the start of a slow end for Starmer."
"The end result is that the Labour party is likely to shift to the left. Even if the party sticks to the fiscal rules, it's likely that both spending and taxes rise, and borrowing may rise if defence spending is carved out. However, we don't expect a general election to be called before 2028 at the earliest."
"While any leadership contender will continue to stress the importance of Labour's fiscal rules, it's clear they will want to put their own stamp on the policy (Chancellor Reeves will almost certainly be replaced when Starmer goes). A candidate further on the left may well stick to some form of Reeves' rules, but will likely want to increase spending, meaning higher taxes."
"It's worth stressing that with such a large majority (currently 165 seats), the Labour party is in a comfortable position in Parliament. Especially in light of the current state of the polls, a new leader will almost certainly not want to call a general election anytime soon (unlike Boris Johnson, who called one just three months into the job)."
"We suspect that if polls have moved favorably under a new PM, the election could take place sometime in 2028, but it will be a clear function of the polls at the time. An election in 2026 or 2027 remains unlikely, in our view."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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