Forex News
- Core PCE rises 3.4%, keeping pressure on the Fed alive.
- GDP and jobless claims beat forecasts, but US Dollar slips.
- UK political uncertainty lingers as Burnham succession questions grow.
The Pound Sterling (GBP) advances 0.22% against the US Dollar (USD) on Thursday, even though the US economy grew faster than previously reported in Q1, while inflation readings suggest the Federal Reserve (Fed) needs to tighten policy. The GBP/USD pair trades at 1.3194 after bouncing off daily lows of 1.3151.
GBP/USD gains as Dollar profit-taking offsets strong US data
The US Dollar treads water even though the Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index, expanded by 3.4% YoY as expected, up from 3.3% in April, implying that further tightening might be needed. The US Dollar Index (DXY), which tracks the buck’s value against six currencies, is down 0.17% at 101.41.
US Treasury yields are also down, with the 10-year T-note yield down two basis points to 4.378%. US Gross Domestic Product (GDP) growth for Q1 2026 rose by 2.1% QoQ, exceeding estimates and the previous 1.6% print. Initial Jobless Claims for the week ending June 20 dipped from 227K to 215K below estimates, while Durable Goods Orders contracted -4.5% in May as expected, down from 8% gain in the previous month.
Given the backdrop, the Greenback was expected to extend its rally, but traders seem to be booking profits as money markets trimmed Fed hawkish bets for 2026.
Prime Terminal data shows that traders expect at least 30 basis points of tightening towards the end of the year, down from nearly 40 on June 22.
In the UK, the docket remained absent, but the resignation of Prime Minister Keir Starmer opened the door for Andy Burnham. Burnham, who is seen as Starmer’s successor, is said not to retain Chancellor Rachel Reeves, and there’s speculation about who he would choose to succeed her.
Last year, Burnham called for an end to the UK’s dependence on foreign lenders, which triggered worries about him becoming the Prime Minister.
Mark Dowding, chief investment officer at the hedge fund RBC BlueBay, said that “He is boxed in by the fact that government finances are in a weak position, and if he chooses to ignore this reality, then he could find himself under pressure very quickly.”
Aside from this, the deal between the US and Iran pushed Oil prices lower, easing inflationary pressures. Meanwhile, the Bank of England is expected to hold rates unchanged at the July meeting, yet traders had priced in a rate hike by December.
GBP/USD Price Forecast: Technical outlook
In the daily chart, GBP/USD trades at 1.3207. The pair remains under pressure as it holds well below the clustered 50-, 100- and 200-day simple moving averages (SMAs) grouped around 1.3437, keeping the broader tone bearish after losing the prior uptrend support line that was broken near 1.3451. The Relative Strength Index (14) at roughly 36 drifts in bearish territory but above oversold conditions, hinting that sellers retain control while still leaving room for additional downside before stretched conditions emerge.
On the topside, the SMA cluster around 1.3437 is the first significant resistance, followed by the descending resistance trend line that was last violated around 1.3537, where prior reactions suggest renewed supply. On the downside, initial demand is expected around the former rising trendline origin close to 1.3159 and the nearby recent low area around 1.3167; a decisive break beneath this band would expose deeper losses, while holding above it would merely signal consolidation within a still bearish daily backdrop.
(The technical analysis of this story was written with the help of an AI tool.)
(This story was corrected on June 25 at 17:38 GMT to say that data shows that traders expect at least 30 basis points of tightening, not easing.)
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.
UOB economists Enrico Tanuwidjaja and Sathit Talaengsatya note that the Bank of Thailand (BoT) kept its policy rate at 1.00% and is expected to hold this level through 2027. They stress that Thailand’s recovery is narrow, with strength in technology exports but weak household demand and SME credit. They see cost-push inflation as temporary and not a trigger for rate hikes.
BoT seen on extended on-hold stance
"We maintain our view that 1.00% is the terminal rate for this cycle and expect the BoT to remain on hold throughout the rest of 2026 and throughout 2027. Persistent economic slack, weak demand-driven inflation, household and SME balance-sheet repair, and impaired bank-credit transmission should offset the temporary headline inflation shock. Policy support should increasingly rely on targeted fiscal, debt-restructuring, and credit-enhancement measures rather than further broad-based policy rate reductions."
"The policy guidance is best interpreted as a conditional, data-dependent hold with a high threshold for action in either direction. BoT is prepared to look through the first-round energy and production-cost shock, so long as price increases do not become broad-based and persistent, and medium-term inflation expectations remain anchored. At the press conference, the BoT indicated that the current rate should be sufficient to manage the baseline inflation path, while retaining the option to tighten should inflation materially exceed its forecast or second-round effects intensify."
"However, a pre-emptive hike appears unlikely while domestic purchasing power, SME activity, and bank credit remain weak. Equally, the MPC offered no signal of renewed easing: the repeated description of the current rate as “appropriate”, the unanimous vote, and the emphasis on fiscal and targeted financial measures suggest that 1.00% is the working terminal rate. Near-term policy attention will therefore focus on cost pass-through, inflation expectations, baht volatility, and borrower credit quality rather than on fine-tuning activity through small changes in the policy rate."
"The risks to our rate call are two-sided, but the thresholds for a move remain high. A BoT hike would require evidence that the current relative-price shock is becoming generalized—through persistent services inflation, stronger wage growth, a material rise in medium-term inflation expectations, or disorderly baht depreciation that amplifies imported-price pass-through. Our current house view is that the Fed will remain on hold through 2026 and resume easing in 2027, rather than deliver further hikes in either year."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- Gold rebounds from a more than seven-month low after the latest US inflation report.
- US PCE data came broadly in line with market expectations.
- Technically, XAU/USD remains in a well-defined downtrend, with oversold signals beginning to emerge.
Gold (XAU/USD) shows signs of stabilization on Thursday as traders digest the latest US Personal Consumption Expenditures (PCE) Price Index, which came broadly in line with market expectations. At the time of writing, XAU/USD trades around $4,036 after hitting a more than seven-month low of $3,959 on Wednesday.
The US Bureau of Economic Analysis reported that core PCE rose to 3.4% YoY in May from 3.3% in April. On a monthly basis, Core PCE was unchanged at 0.3%. Headline PCE accelerated to 4.1% YoY from 3.8%, marking its highest annual reading since April 2023.
Traders focused on the stable core PCE reading, the Federal Reserve's (Fed) preferred inflation gauge, which weighed modestly on the US Dollar (USD) and helped XAU/USD rebound from below the $4,000 mark.
Even so, the metal remains nearly 27% below its all-time high near $5,600 reached in January. The decline has been largely driven by the fallout from the US-Iran war, which boosted the US Dollar (USD), triggered liquidity-driven selling and fueled expectations that the Fed could raise interest rates later this year as elevated Oil prices pushed inflation higher.
The latest inflation data did little to challenge the higher-for-longer interest rate narrative. According to the CME FedWatch Tool, traders are currently pricing in a 60% chance of a rate hike at the September meeting, down from 67% earlier in the day.
However, with Oil prices back to pre-war levels, fears of a sustained inflationary shock have eased. Still, inflation remains well above the Fed's 2% target, suggesting monetary policy is likely to stay restrictive for longer. As a result, Gold may struggle to stage a meaningful recovery.
Additional data showed the US economy expanded at an annualized pace of 2.1% in the first quarter, up from of 1.6%, according to the final estimate.
On the geopolitical front, shipping through the Strait of Hormuz continues to improve following the interim peace agreement between the United States and Iran. The latest round of talks revealed that differences remain over inspections of Iran's nuclear program and the future management of the Strait.
Technical Analysis: Bearish trend remains intact as oversold signals emerge
On the daily chart, XAU/USD remains bearish as price holds well below the 200-day Simple Moving Average (SMA) at $4,474 and the 100-day SMA at $4,690.
The metal also remains under a downward sloping resistance trend line, whose break level comes in near $4,350, while the Relative Strength Index (RSI) at 29.87 slips into oversold territory, hinting that while selling pressure dominates, the downside could become vulnerable to short-covering bounces.
On the upside, initial resistance is seen at the horizontal barrier around $4,200, with the descending trend-line break level near $4,350 reinforcing this supply zone. Above that, the 200-day SMA at $4,474 and the 100-day SMA at $4,690 form a broader medium-term resistance band that would need to be reclaimed to ease the prevailing bearish structure.
On the downside, the next notable cushion is the horizontal support at $3,900.00, and a clear break beneath this floor would expose the metal to a deeper corrective phase despite the emerging oversold signals on momentum.
(The technical analysis of this story was written with the help of an AI tool.)
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.
- USD/JPY comes under pressure as the US Dollar eases after the US PCE data broadly meet expectations.
- Markets trim September Fed rate-hike bets after the inflation report.
- Tokyo CPI data on Friday could provide fresh guidance on the timing of the BoJ's next rate hike.
USD/JPY trades slightly lower on Thursday as the US Dollar (USD) eases after the latest US Personal Consumption Expenditures (PCE) data broadly matched market expectations. Still, the Japanese Yen (JPY) remains pinned near its 40-year lows. At the time of writing, the pair trades around 161.75.
Data from the US Bureau of Economic Analysis showed that the core Personal Consumption Expenditures (PCE) Price Index rose to 3.4% YoY in May from 3.3% in April. On a monthly basis, core PCE held steady at 0.3%. Meanwhile, headline PCE accelerated to 4.1% YoY from 3.8%, marking its highest annual reading since April 2023.
Traders looked past the sharp increase in headline PCE, focusing instead on the modest rise in core PCE and the steady monthly reading. Following the data release, traders scaled back expectations for a September Fed rate hike, with the probability falling to 60% from 67% before the inflation report, according to the CME FedWatch Tool.
The US Dollar gave back a small portion of its recent gains following the data. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, traded around 101.40 after climbing to a more than one-year high near 101.80 on Wednesday.
However, the US Dollar's downside appears limited as stronger first-quarter GDP growth and lower-than-expected Initial Jobless Claims highlighted the resilience of the US economy, reinforcing expectations that the Federal Reserve can afford to keep monetary policy restrictive.
Meanwhile, expectations that the Bank of Japan (BoJ) will continue to normalize monetary policy have done little to support the Japanese Yen. The wide interest-rate differential between the BoJ and the Fed continues to act as a headwind.
Even so, the Yen's persistent weakness above the 160.00 threshold keeps intervention risks elevated, limiting stronger upside moves in USD/JPY in the near term.
Attention now turns to Friday's Tokyo Consumer Price Index (CPI) report as traders look for clearer signals on when the BoJ could deliver its next rate hike.
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 | -0.12% | -0.26% | -0.08% | -0.21% | -0.13% | -0.03% | -0.25% | |
| EUR | 0.12% | -0.12% | 0.06% | -0.07% | 0.01% | 0.13% | -0.12% | |
| GBP | 0.26% | 0.12% | 0.17% | 0.08% | 0.13% | 0.26% | -0.00% | |
| JPY | 0.08% | -0.06% | -0.17% | -0.14% | -0.07% | 0.03% | -0.20% | |
| CAD | 0.21% | 0.07% | -0.08% | 0.14% | 0.06% | 0.20% | -0.07% | |
| AUD | 0.13% | -0.01% | -0.13% | 0.07% | -0.06% | 0.11% | -0.11% | |
| NZD | 0.03% | -0.13% | -0.26% | -0.03% | -0.20% | -0.11% | -0.27% | |
| CHF | 0.25% | 0.12% | 0.00% | 0.20% | 0.07% | 0.11% | 0.27% |
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).
MUFG highlights that strong earnings guidance from Micron Technology, a key AI memory supplier, has boosted sentiment in AI and tech stocks. Revenue guidance far exceeded expectations and new strategic agreements supported a sharp rebound in South Korean equities, with the Kospi recovering most of its earlier sell-off, though FX spillovers have remained limited so far.
Micron surprise supports AI equity sentiment
"The other main development overnight was the release of strong earnings update from Micron Technology."
"The largest US maker of computer memory chips announced that revenue in the fiscal fourth quarter will be approximately USD50 billion coming in well above analysts’ estimate of USD43.2 billion."
"Micron and its peers in the memory space such as Samsung Electronics and SK Hynix have become major beneficiaries of the AI infrastructure build out."
"The strong earnings update from Micron has helped South Korean stocks to rebound overnight after the heavy sell-off at the start of this week and will provide a boost for investor sentiment in AI/tech stocks more broadly."
"The Kospi equity index has risen by around 6% overnight and has now almost fully reversed the outsized sell-off on Tuesday."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
TD Securities strategists note the Bank of Canada’s (BoC) June Summary of Deliberations maintained its recent balancing act between higher Oil price spillover risks and domestic softness. Policymakers downplayed the Q1 Gross Domestic Product (GDP) upside surprise, stressed the economy is not in recession, and highlighted stronger per-capita consumption while treating inflation risk discussions as somewhat dated after Oil’s latest moves.
BoC downplays GDP surprise and oil slide
"The Bank of Canada's Summary of Deliberations from June stuck to the recent script as the Bank continued to balance the risk of spillovers from higher oil prices against ongoing trade uncertainty and domestic weakness."
"The Bank did downplay the Q1 GDP surprise as members noted that government spending can be choppy and agreed the economy was not in recession."
"The Minutes also cited stronger per-capita consumption, while the discussion around inflation risks came off as more stale given the recent move in oil prices."
"The Bank had a relatively conservative assumption for crude oil in its April MPR, which should give it a little more cover to downplay the recent decline."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- AUD/USD remains muted with the Australian Dollar struggling to gain traction despite a pullback in the Greenback.
- US PCE inflation rose to 4.1% YoY in May, while core PCE increased to 3.4% YoY.
- Iran warned that uncoordinated shipping routes through the Strait would be “unacceptable and dangerous.”
The AUD/USD pair trades muted near the 0.6900 area on Thursday, with the Aussie struggling to gain amid a pullback in the US Dollar (USD) as investors digested the latest United States (US) inflation figures and fresh geopolitical risks around the Strait of Hormuz.
Annual inflation in the United States, measured by the Personal Consumption Expenditures (PCE) Price Index, climbed to 4.1% in May from 3.8% in April, according to the Bureau of Economic Analysis. The core PCE Price Index, which excludes volatile food and energy prices, rose to 3.4% YoY, up one-tenth of a point, while monthly headline PCE increased 0.4% and core PCE rose 0.3%.
Australia’s labor market showed signs of recovery in May, with Employment Change rising by 40.3K, above expectations of 25K and rebounding sharply from the previous 40.7K decline. The increase was mainly driven by part-time employment, which rose by 35.2K, while the Unemployment Rate held steady at 4.4%, matching forecasts and easing from the previous 4.5%.
Meanwhile, geopolitical uncertainty added another layer of pressure on the risk-sensitive Australian Dollar, capping its gains. Iran’s Islamic Revolutionary Guard Corps warned that safe passage through the Strait of Hormuz would only be allowed through routes designated by Tehran, calling any newly announced shipping lanes without coordination “unacceptable and dangerous.” It also warned that vessels ignoring instructions could face action.
Short-term technical analysis:
On the 4-hour chart, AUD/USD trades at 0.6903, maintaining a bearish near-term bias as price remains below both the 20-period Simple Moving Average (SMA) at 0.6929 and the 100-period SMA at 0.7031. The configuration of these SMAs above spot suggests rallies are likely to be sold into, while the Relative Strength Index (RSI) hovering just above the oversold band near 31 hints that downside momentum is still present but may be losing some intensity.
On the topside, initial resistance is located at the 20-period SMA around 0.6929, with a stronger barrier emerging at the 100-period SMA near 0.7031. In the absence of clearly defined indicator-based supports below current levels, traders may instead look to prior price lows on the four-hour chart for interim floors, but the broader structure favors selling into bounces while AUD/USD trades under the clustered moving averages.
(The technical analysis of this story was written with the help of an AI tool.)
Scotiabank strategists Shaun Osborne and Eric Theoret report USD/JPY is steady ahead of Tokyo Consumer Price Index (CPI), where consensus expects a pickup in both headline and core inflation into the mid-to-upper 1% range. Hawkish remarks from Bank of Japan (BoJ) officials, including guidance on a ‘neutral’ rate near 2%, contrast with the still-low policy rate. They warn spot remains uncomfortably close to 162, with little support seen before 160.
Yen steady as Tokyo CPI looms
"The yen is steady, entering Thursday’s NA session unchanged vs. the USD. There were no overnight releases and near-term risk lies with the 7:30pm ET Tokyo CPI data for June."
"Consensus is looking to an increase across both headline and narrower measures, rising from the lower/mid-1% range to the mid/upper-1% range. "
"Hawkish comments from the BoJ’s Tamura have added to Wednesday’s guidance from Gov. Ueda, suggesting a ‘neutral’ interest rate level at 2% (vs. the current policy rate at 1.00%)."
"For USDJPY, we remain uncomfortably close to the 162 level and suspect that MoF officials are closely eyeing the latest gains in spot."
"In terms of support, we see little ahead of 160."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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