Forex News
- AUD/USD jumps to near 0.6980 as upbeat market sentiment lends strength to the Australian Dollar.
- The US Dollar corrects due to a pullback in rally in US bond yields.
- Investors will focus on the US CPI and the Australian employment data for September.
The Australian Dollar (AUD) outperforms its major currency peers on Friday, trading 0.35% higher at around 0.6980 against the US Dollar (USD) during the European session. The Australian currency capitalizes on upbeat market mood, driven by a steep correction in United States (US) Treasury Yields.
Australian Dollar Price Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.12% | -0.04% | 0.22% | -0.05% | -0.31% | -0.20% | -0.09% | |
| EUR | 0.12% | 0.08% | 0.36% | 0.07% | -0.18% | -0.06% | 0.01% | |
| GBP | 0.04% | -0.08% | 0.27% | 0.02% | -0.27% | -0.14% | -0.01% | |
| JPY | -0.22% | -0.36% | -0.27% | -0.27% | -0.54% | -0.41% | -0.30% | |
| CAD | 0.05% | -0.07% | -0.02% | 0.27% | -0.29% | -0.16% | -0.02% | |
| AUD | 0.31% | 0.18% | 0.27% | 0.54% | 0.29% | 0.12% | 0.29% | |
| NZD | 0.20% | 0.06% | 0.14% | 0.41% | 0.16% | -0.12% | 0.13% | |
| CHF | 0.09% | -0.01% | 0.00% | 0.30% | 0.02% | -0.29% | -0.13% |
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 Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
At press time, 10-year US bond yields are up 0.17% to near 2.44%. However, they corrected sharply on Thursday after failing to extend rally beyond the two-decade high at 5.36%. S&P 500 futures trade 0.33% higher to near 7,800, indicating an improvement in investors’ risk appetite.
Us Yields retreat as strong 30-year auction caps robust week for treasuries
Analysts at Danske Bank note that “there was a solid decline in the US yields yesterday on the back of another solid US Treasury auction,” with the latest sale focused on the long end of the curve. “This time the 30Y bonds were sold and rounded off a week with solid demand for US Treasuries given the high level for yields,” the bank adds, underscoring sustained investor appetite at current yield levels.
Going forward, major triggers for the US Dollar and the Australian Dollar will be the US Consumer Price Index (CPI) and Australian employment data for September, which will be published next week.
AUD/USD Technical Analysis
In the daily chart, AUD/USD trades at 0.6980, keeping a bearish near-term tone as spot holds beneath the 20-day Exponential Moving Average (EMA) at 0.7020. The pair remains capped by this short-term EMA, which suggests lingering downside pressure, while the Relative Strength Index (14) near 39 hints at weak but stabilizing momentum after recent oversold readings.
On the topside, initial resistance is the October 6 high at 0.6990 before the 20-day EMA at 0.7020, and a sustained break above this barrier would be needed to ease the current bearish bias and open the way for a stronger recovery. On the downside, the major support for AUD/USD is the October 8 low at 0.6933, followed by the October low at 0.6903.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
Danske Research Team notes Brent crude briefly surged above USD 105 per barrel to its highest level in nearly a month, driven by reduced Strait of Hormuz traffic and hurricane-related supply concerns. The move reversed after President Trump said the US would not attack Iran before midterm elections and as reports suggested China will resume refined fuel exports, leaving Brent near USD 102-103.
Brent retreats after geopolitical repricing
"The initial move higher was a reaction to the sharp drop in Strait of Hormuz traffic following last week's record number of tanker attacks, alongside concerns over potential production disruptions in the US Gulf Coast as Hurricane Isaias approaches."
"In commodities,Brent crude briefly topped USD 105/bbl yesterday, reaching its highest level in almost a month, before easing to around USD 103/bbl overnight after President Trump said the US would not attack Iran before the midterm elections."
"Reports that China is set to resume refined fuel exports in October also helped ease the fuel market."
"Brent is trading at the 102-103 level this morning after having been as high as USD 106 yesterday."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Indonesia’s Retail Sales growth accelerated to 1.3% year-over-year in August, hitting a five-month high.
- USD/IDR weakens as Donald Trump signaled productive talks with Iran, reducing safe-haven demand for the US Dollar.
- Expectations for a Fed rate hike this month dropped sharply to 17.7%.
USD/IDR loses ground after two days of gains, trading around 17, 910 during Asian hours on Friday. The Indonesian Rupiah (IDR) remains stronger following the release of domestic Retail Sales data.
Indonesia’s Retail Sales expanded by 1.3% year-over-year in August, accelerating from a 1.1% gain in July and marking a second consecutive month of growth. This represents the fastest pace of annual growth since March, primarily bolstered by ongoing government measures designed to cushion households against persistent cost pressures. On a month-over-month basis, retail sales rose 0.8%, recovering from July's 0.1% contraction and achieving their strongest gain in five months.
The USD/IDR pair depreciates as the US Dollar (USD) loses its safe-haven demand. The shift followed social media statements from US President Donald Trump, who announced that the US was engaged in "productive discussions" with Iran and would refrain from military strikes before the midterm elections. However, while noting that record volumes of crude oil were passing through the Strait of Hormuz, President Trump emphasized that the US naval blockade of Iranian ports would remain fully operational.
Shifted geopolitical expectations also impacted monetary policy forecasts. According to the CME FedWatch tool, markets are now pricing in nearly a 17.7% chance that the US Federal Reserve will raise interest rates by at least 25 basis points at its upcoming policy meeting later this month—a notable decline from 38% a week ago. Meanwhile, expectations for a rate hike at the Fed's December meeting remain strong, with markets pricing in an 83% probability.
Fed expectations tilt dovish after Waller comments on rate path
Deutsche Bank highlights that Fed pricing “shifted a bit dovishly” after remarks from Fed Governor Waller, who indicated that further rate hikes “do not need to come at consecutive meetings.” The bank notes that this nuance in Waller’s guidance has encouraged investors to reassess the pace of any additional tightening, reinforcing a more measured trajectory for the Fed’s policy path.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Volkmar Baur at Commerzbank highlights the UK economy’s resilient growth, with upward revisions to GDP and solid monthly data. With inflation still sticky and core inflation at 2.6%, he now expects the Bank of England to hike rates in November and again in February to 4.25%. As a result, EUR/GBP is seen trading broadly sideways in coming months before Sterling weakens later in 2027.
BoE hikes and Sterling path
"The UK economy has remained relatively resilient so far this year. Following growth of 0.6% q/q in the first quarter, second-quarter GDP was revised up to 0.5% in the final release. Monthly GDP data for July, showing a 0.4% m/m increase, also point to a solid start to the third quarter."
"The improved growth outlook should make it easier for the Bank of England to raise rates further in order to lean against inflation. Until now, we had not expected the BoE to hike rates again. Recent developments, however, have led us to conclude that a November rate hike is now more likely than not. Moreover, we do not expect it to be a one-off move. We therefore anticipate another hike in February, taking Bank Rate to 4.25%."
"The market is also pricing in two additional rate hikes by February, meaning our revised call should have little immediate market impact. However, we had previously expected sterling to weaken towards year-end. We now expect EUR/GBP to trade broadly sideways over the coming months."
"It is only from the second quarter of next year that we expect sterling to come under renewed pressure against the euro. The market currently prices in two further rate hikes beyond the two moves we expect, implying four hikes in total. Following the February meeting, we expect those additional tightening expectations to be gradually priced out, putting sterling under renewed pressure."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/GBP approaches 0.8500 after bouncing from 0.8447 lows but remains on track for the second consecutive weekly decline.
- Lower French bond yields have given some respite to the Euro, but the high Oil prices remain a heavy weight.
- BoE's Bailey reaffirmed the bank's commitment to bring inflation to target on Thursday.
The Euro (EUR) trims losses against the British Pound (GBP) on Friday, as the bond rout eased, allowing for a mild risk appetite during the Asian session. The EUR/GBP pair trades near 0.8500 at the European session opening, up from the 16-month low at 0.8447 hit earlier this week but still on track for a nearly 1.5% decline on a two-week losing streak.
France’s Government Bond yields have pulled back from multi-decade highs on Friday, giving some respite to the single currency, but remain alarmingly high, as the deadlock in the government hinders any credible savings plan. Against this background, the spreading student protests are making things only worse.
The Governor of the Bank of France, Emmanuel Moulin, came out on Thursday to say that the country does not need help from the European Central Bank (ECB), but these sorts of comments are normally more concerning than reassuring. The Eurozone finance ministers and the ECB urged the French government to approve the 2027 budget as soon as possible to calm markets.
Oil prices above $100 are a headwind to Euro recovery
Beyond that, Crude prices remain high, putting additional pressure on the Euro. Brent Oil trades at the $101.50 area, below Thursday’s highs past $104.00 but still above the key $100 area, a level considered critical for stagflationary risks on the Eurozone’s economies.
In the UK, Bank of England (BoE) Governor Andrew Bailey observed on Thursday that inflation risks are rising as high energy prices persist and reiterated that the central bank is "fully committed to returning inflation to target". These comments feed hopes that the bank may hike interest rates before the end of the year, and provide some support to the Pound.
The calendar on Friday is thin, with the meeting of the Eurozone's Economic and Financial Affairs Council and speeches from ECB Board members Piero Cipollone and Isabel Schnabel as the only events worth mentioning.
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.
United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight that EUR/USD has bounced off recent lows near 1.1164 but downside momentum remains lacklustre. The Euro’s recovery is seen as constrained within 1.1190–1.1240 intraday, while the broader 1–3 week view still allows for a test of 1.1145 as long as strong resistance at 1.1265 holds and the oversold downtrend phase persists.
Euro rebound seen as limited in scope
"24-HOUR VIEW: EUR declined to a low of 1.1164 two days ago and then rebounded. Yesterday, when EUR was at 1.1200, we noted that “downward momentum has slowed with the rebound,” but we were of the view that EUR could “revisit 1.1165 before a more sustained recovery is likely.” However, dipped less than expected to 1.1171 before recovering to close 0.13% higher at 1.1209. The recovery could extend but with no clear increase in upward momentum, any advance is likely to stay within a 1.1190/1.1240 range."
"1-3 WEEKS VIEW: Two days ago (07 Oct, spot at 1.1255), we highlighted “downward momentum has slowed further.” We also highlighted that “only a clear break above 1.1285 (‘strong resistance’ level) would indicate that the weakness in EUR has stabilised.” After EUR fell to a low of 1.1164, we indicated yesterday (08 Oct, spot at 1.1200) that “downward momentum remains lackluster.” We added, “however, as long as the ‘strong resistance’ (level is now at 1.1265) continues to hold, there is a chance for EUR to test 1.1145.” We continue to hold the same view."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- WTI price edges lower to near $89.65 in Friday’s early European session.
- Trump said the US would not attack Iran before November’s midterm elections.
- IEA agreed to accelerate oil reserve release.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $89.65 during the early European trading hours on Friday. WTI declines after US President Donald Trump said Washington would not attack Iran before November’s midterm elections.
Reuters reported on Thursday that Trump dismissed the possibility of attacking Iran before the US midterm elections, emphasizing ongoing "productive discussions" with Tehran. US President added that crude was flowing through the Strait of Hormuz in “record numbers. This development could weigh on the WTI price in the near term.
Furthermore, the International Energy Agency (IEA) agreed to accelerate the release of oil stocks and prioritize diesel supplies as governments grapple with record fuel prices and war-related supply disruptions. The announcement from the IEA followed an agreement by G7 countries last week to release 100 million barrels of crude and diesel, which raised expectations of additional oil stock releases.
US crude oil inventories unexpectedly declined last week. According to the Energy Information Administration (EIA), crude stockpiles fell by 3.186 million barrels in the week ending October 2, reversing the previous week’s increase of 922,000 barrels. The market consensus was for a rise of 1.9 million barrels.
Middle East tensions keep WTI risk premium elevated into US midterms
Analysts at ABN Amro flag that “escalation risk into midterms” is increasingly supporting crude, with news that President Trump has asked the Pentagon to ready Iran strike plans ahead of the US Midterm elections and “escalating tanker attacks in regions outside the Omani route, such as off Qatar and in the Gulf of Oman,” helping to fuel upside in oil prices. While they note that “flows from the region have largely normalized,” ABN Amro cautions that “the need for US navy escorts, increased costs and logistical frictions and constant risk of being attacked call into question the longer-term feasibility of the flows.” In their view, “this ultimately warrants a sticky risk premium to remain in pricing,” with “CTAs are buyers of WTI crude on the day, and both WTI and brent crude are long across all momentum signals once again.”
Technical Analysis: WTI keeps a mildly bullish tone in the near term
In the daily chart, WTI US Oil holds above both the 100-day simple moving average (SMA) and the lower Bollinger Band, which keeps the near-term bias mildly bullish despite the recent pullback from the $90 area. Price remains below the Bollinger middle band, suggesting that while the broader uptrend is still supported by underlying demand, the latest consolidation under the mid-channel is tempering upside momentum; the Relative Strength Index (14) near 49 reinforces a neutral, range-bound tone rather than strong directional pressure.
On the topside, initial resistance is located at the Bollinger middle band around $92.25, with a break higher exposing the upper Bollinger Band near $99.35 as the next bullish objective. On the downside, immediate support is seen close to the lower Bollinger Band at $85.15, ahead of the more strategic floor provided by the 100-day SMA near $84.10, where buyers would be expected to defend the broader ascending structure if corrective pressures deepen.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
(This story was corrected at 06:10 GMT on Friday to say, in the first bullet point, that WTI price edges lower to near $89.65 in Friday’s early European session, not Asian session.)
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.
- GBP/USD rises to near 1.3250 as the market sentiment turns favorable for riskier assets.
- A pause in rally in US bond yields lend support to the British Pound.
- The US Dollar retreats amid correction in US Treasury Yields.
The British Pound (GBP) is up 0.17% at around 1.3250 against the US Dollar (USD) during the European trading session on Friday. The GBP/USD pair gains as a pullback in United States (US) Treasury Yields after a juggernaut rally has lifted market sentiment.
At press time, S&P 500 futures are up 0.34% to near 7,8000, reflecting a risk-on market mood. 10-year US Treasury Yields are down 0.23% to near 5.22%. Yields on US-backed securities are down over 2.5% from its fresh-two-decade high of 5.36% posted this week.
Lower US bond yields have also weighed on the US Dollar. In the early European trade, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.16% lower marginally below 102.00.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.18% | -0.10% | 0.16% | -0.09% | -0.38% | -0.36% | -0.18% | |
| EUR | 0.18% | 0.09% | 0.36% | 0.09% | -0.19% | -0.11% | -0.01% | |
| GBP | 0.10% | -0.09% | 0.29% | 0.04% | -0.27% | -0.18% | -0.03% | |
| JPY | -0.16% | -0.36% | -0.29% | -0.25% | -0.55% | -0.48% | -0.32% | |
| CAD | 0.09% | -0.09% | -0.04% | 0.25% | -0.32% | -0.24% | -0.07% | |
| AUD | 0.38% | 0.19% | 0.27% | 0.55% | 0.32% | 0.07% | 0.26% | |
| NZD | 0.36% | 0.11% | 0.18% | 0.48% | 0.24% | -0.07% | 0.17% | |
| CHF | 0.18% | 0.01% | 0.03% | 0.32% | 0.07% | -0.26% | -0.17% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Meanwhile, investors shift their focus to the US Consumer Price Index (CPI) data for September, which will be released on Wednesday. The inflation data is expected to have a significant impact on Federal Reserve’s (Fed) interest rate expectations as several officials have signaled that high price pressures due to energy shocks and Artificial Intelligence (AI) build up is a key concern for them.
“Several officials warned that the AI buildout could eventually push aggregate demand ahead of supply, creating additional upward pressure on prices,” Federal Open Market Committee (FOMC) minutes of the September meeting showed on Wednesday.
GBP/USD Technical Analysis
In the daily chart, GBP/USD trades at 1.3243, maintaining a bearish near-term bias as spot holds under the 20-day exponential moving average (EMA) at 1.3298. The positioning below this short-term EMA hints at a market still prone to selling into upticks, while the Relative Strength Index (RSI) around 40 suggests weak but not extreme downside momentum, consistent with a pressured, rather than oversold, tone.
On the topside, immediate resistance is defined by the 20-day EMA at 1.3298, which needs to be reclaimed to ease the current bearish pressure and open the way for a more sustained recovery. Looking down, the October low at 1.3181 is the key support zone.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
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