Forex News

• EUR/GBP extends its advance near the 0.8570 zone at the end of the European session.
• UK and euro-area headline inflation both printed 2.9% for July, but a slowdown in UK producer prices trimmed the Sterling bid.
• July FOMC Minutes are due this afternoon, with global bond yields easing back from multi-decade highs.

EUR/GBP trades on the front foot on Wednesday, pushing up to the vicinity of a two-week high near the 0.8570 region as the Euro holds firm against a softer British Pound (GBP). The pair has cleared its recent range after a run of green candles on the 4-hour chart.

The move followed July inflation reports from both economies. UK headline Consumer Price Index (CPI) rose 2.9% over the year, a four-month high and up from 2.6% in June, matching forecasts. Core CPI held at 2.6%, a touch hotter than the 2.5% expected. But core services inflation, the gauge the Bank of England (BoE) watches most closely, eased to 3.4% from 3.6%, and that cooling limited Sterling's lift after the release.

On the other side of the pair, the final euro-area reading confirmed headline inflation at 2.9% for July, unchanged from June and still well above the European Central Bank (ECB) target. With price pressure firm and the print in line, the Euro kept its footing.

The backdrop remains a global bond-market squeeze. Longer-dated yields have run to multi-year highs this week on inflation and fiscal worries, with German and UK long-end yields both elevated. US Treasury yields pulled back on Wednesday from those highs as traders square up ahead of the Federal Reserve's (Fed) Federal Open Market Committee (FOMC) Minutes.

Investors will look for detail on the split at that meeting, where pre-release reporting flagged three dissenters who wanted a rate hike. The tone of the Minutes will steer broader risk sentiment into the European close.

Short-term technical analysis:

On the 4-hour chart, EUR/GBP trades at 0.8572, holding a modest bullish bias as it remains above both the 20-period Simple Moving Average (SMA) at 0.8552 and the 100-period SMA at 0.8559. The cluster of nearby horizontal levels at 0.8561 and 0.8563 reinforces this underlying demand zone, while the Relative Strength Index (RSI) near 68 suggests firm upward momentum that is edging toward overbought territory, hinting at the risk of a short-term pause if buyers hesitate near the current highs.

On the topside, immediate resistance is defined by the recent horizontal barrier at 0.8573, and a sustained break above this level would open the way for further gains in the near term. On the downside, initial support is seen at the 0.8563/0.8561 band, ahead of the 100-period SMA at 0.8559 and the lower horizontal and moving average floors at 0.8558 and 0.8552, where dip-buying interest is likely to emerge while the pair maintains its current constructive structure.

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

Geoff Yu writes that Bank Indonesia (BI) kept its benchmark rate at 5.75% for a second month in Acting Governor Destry Damayanti’s first decision. The central bank aims to support Indonesian Rupiah (IDR) stability, contain imported inflation and sustain growth amid global volatility and Middle East tensions. BI expects the Rupiah to strengthen and will use monetary tools, intervention and inflow incentives to support it.

Policy continuity under Damayanti

"Bank Indonesia (BI) kept its benchmark policy rate unchanged at 5.75% for a second straight month in its first decision under Acting Governor Destry Damayanti."

"The central bank said the hold is aimed at supporting rupiah stability, containing imported inflation, and preserving sustainable growth amid heightened global volatility and Middle East tensions."

"BI expects the rupiah to continue strengthening and will use monetary tools, market intervention, and foreign inflow incentives to support the currency. It also signaled continued macroprudential support to maintain liquidity and lending."

"BI left its 2026 growth forecast unchanged at 4.9%–5.7% and reiterated coordination with the government."

"The decision signals policy continuity after Perry Warjiyo’s exit, with no abrupt shift toward easing."

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

• GBP/USD climbs as Treasury buyback drives yields and the US Dollar lower.
• UK CPI rise keeps BoE rate-hike risks modestly alive.
• Fed Minutes loom after three hawkish dissents at last meeting.

The Pound Sterling (GBP) climbs against the US Dollar (USD) on Wednesday as the US Treasury stepped up in the markets to offer liquidity support via a buyback of longer-dated bonds, a day after the US 30-year yield hit its highest level since 2007. The GBP/USD pair trades at 1.3610 after reaching a daily high of 1.3630, the highest since May 11.

GBP/USD rallies as US Treasury buyback lowers yields before Fed minutes

The announcement by the US Treasury Secretary pushed US yields lower, as did the Dollar. The US Dollar Index (DXY), which tracks the performance of the buck’s value against six currencies, is down 0.84% at 98.80, near levels last seen by the end of May.

The rise in US yields at the long end of the curve has been driven by higher-than-expected inflation expectations, due to elevated Oil prices stemming from the lack of resolution in the US–Iran conflict.

The US ambassador to Israel said that a large-scale war against Iran remains an option. However, he acknowledged that he is working to establish a mechanism with Syria, Israel and Turkey to de-escalate the conflict, reported Al Hadath.

In the meantime, traders are bracing for the release of the Federal Reserve’s last meeting minutes. The absence of communication from the new Fed Chair, Kevin Warsh, makes the unveiling of the minutes a crucial event for traders to guess the Fed’s next move. 

Worth noting that there were three dissenters in the last meeting, led by Cleveland Fed Beth Hammack, Dallas Fed Lorie Logan and Minneapolis Fed Neel Kashkari.

Across the Atlantic, inflation in the UK showed a mixed reading in July, with headline CPI rising as expected from 2.6% to 2.9% YoY, while core CPI steadied at 2.6% YoY, a tenth above the expected 2.5%.

After the data, expectations that the Bank of England (BoE) would raise rates at the September meeting remain nimble. Money markets had priced in an 80% chance of a hold, while there’s a 20% chance of a 25-basis-point rate hike at the September 17 meeting, according to Prime Terminal.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3606. The pair holds a bullish near-term bias as spot sits on an upward support trend line at 1.3606, with a cluster of former resistance trend lines and the 50/100/200-day simple moving averages (SMA) now acting as stacked support between roughly 1.3501 and 1.3386. The Relative Strength Index (14) at 68.2 is nearing overbought territory, which suggests strong but potentially stretched upside momentum, while the FXS Fed Sentiment Index softens, hinting that policy-related headwinds could slow the advance without yet undermining the broader constructive structure.

On the downside, initial support is found at the current trend-line pivot around 1.3606, followed by the reclaimed downtrend line near 1.3501 and the earlier resistance line broken at 1.3412. Deeper pullbacks would meet structural demand at the triple SMA cluster around 1.3386 and the lower rising trend-line break at 1.3362, where buyers are likely to defend the broader uptrend.

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

• The US 10-year Treasury yield falls to 4.651% after reaching 4.712% earlier on Wednesday.
• The US Treasury doubles the size of some long-dated debt buyback operations to support market liquidity.
• Investors now await the Fed Minutes and a 20-year bond auction, while inflation risks remain elevated.

The US 10-year Treasury yield declines sharply on Wednesday, trading at 4.651% at the time of writing after reaching an intraday high of 4.712%. The move follows a surprise announcement from the United States (US) Department of the Treasury that it will double the size of its liquidity-support buyback operations for longer-dated securities.

The US Treasury says the size of buyback operations for nominal coupon securities in the 10-year to 20-year and 20-year to 30-year sectors will increase from $2 billion to at least $4 billion per operation. The changes will be effective from September 9 through November 4. The announcement follows a sharp increase in long-term borrowing costs, driven in part by concerns over government deficits, inflation and sovereign debt supply.

The reaction is particularly pronounced at the long end of the yield curve. The US 30-year Treasury yield falls sharply after reaching its highest level since 2007 on Tuesday. The decline spills over into the 10-year yield, suggesting investors welcome Washington's willingness to intervene to ease strains in the bond market.

However, the longer-term impact of the measure remains uncertain. Gennadiy Goldberg, head of US rates strategy at TD Securities, says the decision represents the first of several potential measures the Treasury could take to support the long end of the curve. According to Goldberg, a more permanent solution could involve reducing the size of long-dated bond auctions.

Jeremy Stretch, head of G10 FX strategy at CIBC, also notes that the move shows the US Treasury recognizes the pressures affecting the bond market and is prepared to adjust policy to contain them.

The intervention also contributes to weakness in the US Dollar (USD), as falling yields reduce some of the currency's interest-rate support. Attention now turns to the Minutes of the latest Federal Open Market Committee (FOMC) meeting, due later on Wednesday. Investors will look for signs that some Federal Reserve (Fed) officials are considering another interest-rate hike after Fed Chair Kevin Warsh refrained from providing clear forward guidance on the path of monetary policy at his latest press conference.

Markets will also monitor Wednesday's 20-year US Treasury auction. Strong demand could reinforce the decline in yields, while a disappointing auction could quickly revive concerns about investor appetite for long-dated US government debt.

• Japanese Yen climbs to its highest level in over a week against the US Dollar.
• Larger US Treasury debt buybacks push long-term yields sharply lower and weigh on the Greenback.
• Traders await the FOMC Minutes for fresh clues about the Fed’s interest-rate path.

The Japanese Yen (JPY) extends its intraday gains on Wednesday as the US Dollar (USD) comes under fresh selling pressure following a sharp decline in longer-term US Treasury yields. At the time of writing, USD/JPY trades around 158.47, its lowest level in more than a week.

US Treasury yields fall after the Treasury Department announces larger buybacks of longer-dated government debt. The maximum size of each operation in both the 10-to-20-year and 20-to-30-year maturity sectors will rise from $2 billion to at least $4 billion.

The larger buybacks will begin on September 9 and run through November 4. The Treasury says the move aims to improve liquidity in the long-term government bond market.

The benchmark 10-year yield falls by more than 5 basis points to around 4.64%, while the 30-year yield drops nearly 10 basis points to around 5.18%.

Lower US yields reduce the appeal of Dollar-denominated assets, triggering a broad decline in the Greenback. The US Dollar Index (DXY), which gauges the Greenback's value against a basket of six major currencies, trades near 98.94, down 0.72% on the day and touching its lowest level since May 29.

Meanwhile, attention remains on the Federal Reserve’s (Fed) monetary policy outlook. Recent US employment and inflation data have reduced expectations of an imminent interest-rate hike.

However, energy-driven inflation concerns persist as the US-Iran standoff over the Strait of Hormuz drags on. This keeps inflation risks tilted to the upside and leaves open the possibility that the Fed could raise interest rates later this year.

Traders now await the minutes of the Federal Open Market Committee’s (FOMC) July meeting, due at 18:00 GMT, for fresh clues about the Fed’s interest rate path.

On the Japanese side, intervention concerns and hawkish Bank of Japan (BoJ) expectations provide additional support to the Yen. However, fiscal concerns, higher Oil prices and wide interest-rate differentials with other major economies could limit the Yen’s recovery.

Societe Generale’s Sam Cartwright notes United Kingdom (UK) headline inflation rose to 2.9% year-on-year in July, driven mainly by higher household energy bills. Cartwright highlights that Brent and wholesale gas prices, plus indirect energy effects, are likely to push headline Consumer Price Index (CPI) towards 3.5% later in 2026. However, services and food inflation show easing, and indirect energy spillovers remain limited so far.

Energy shock shapes inflation outlook

"Looking ahead, headline inflation is likely to rise further in the near term as higher Brent crude and wholesale gas prices feed through to fuel and household energy costs."

"So far, the inflation data suggest that indirect effects from the energy shock have been limited, largely because upstream cost pressures take time to work their way through supply chains."

"While we expect some spillovers to food and goods inflation, firms' limited pricing power should restrict the degree to which higher input costs are passed on to consumers."

"We estimate that these factors, together with the gradual emergence of indirect effects from the energy shock, will push headline inflation to around 3.5% yoy later this year."

"Uncertainty is high around this forecast, given the volatility in energy prices."

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

Commerzbank analysts note that the Bank of Thailand (BoT) is expected to keep its policy rate at 1.0%, seeing it as sufficiently accommodative. USD/THB has consolidated in a 32.90–33.30 range, with rising global commodity prices and foreign outflows posing downside risks for the Baht.

Baht pressured by oil and outflows

"On monetary policy, the Bank of Thailand (BoT) is expected to keep the benchmark policy rate unchanged at 1.0% at the next meeting on 26 August."

"The policy trade-off remains uncomfortable: domestic demand is soft and growth remains below potential, but inflation has risen because of the earlier energy shock. BoT expects headline inflation to average 2.8% in 2026 and to remain above its 1-3% target range for part of H2 before easing in 2027."

"With the inflation shock largely supply-driven and medium-term expectations still anchored, further tightening appears unnecessary. At the same time, the BoT has described the current 1.0% rate as sufficiently accommodative, suggesting limited appetite for renewed easing unless domestic activity weakens materially. As such, BoT could remain on hold for the rest of the year."

"In FX, USD/THB rose 0.2% to 33.07 yesterday, amid renewed upward pressure on oil prices. The pair has fallen from its late-July high of 33.85 and has consolidated around the 32.90-33.30 range over the past two weeks."

"Looking ahead, higher global commodity prices and foreign portfolio outflows could weigh on the THB."

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