Forex News

• GBP/USD trades above 1.3450 after a 0.71% advance, cutting through the converged 50-day and 200-day EMAs as though neither was there.
• A 6-3 hold with three votes for an immediate hike beat the expected 7-2 split, and the press conference spent its hour insisting nobody should read a tightening cycle into it.
• A 0.2% gain on the Euro against a 0.71% gain on the Dollar leaves most of this rally the property of a currency knocked over by suspected Japanese intervention.

The Bank of England held Bank Rate at 3.75% for a fifth straight meeting on Thursday, and the Monetary Policy Committee (MPC) got there on a 6-3 vote, with three members backing an immediate quarter-point increase against a consensus that had looked for 7-2. GBP/USD trades above 1.3450, up 0.71%, roughly 130 pips above the European morning low short of 1.3350. The advance cut straight through the 50-day and 200-day Exponential Moving Averages (EMA), which have converged just below 1.3400 and have been advertising a range rather than defending one.

A hawkish vote and an hour spent undoing it

The dissent bloc grew by one from June, and the swing factor is not in dispute. Energy prices remain volatile and well above pre-conflict levels, June's Consumer Price Index (CPI) reading of 2.6% is expected to turn higher as those costs pass through, and the dissenters argue that the longer the shock persists, the greater the risk of second-round effects in wage and price setting.

The press conference then spent an hour undoing the impression the vote had just created, with the Governor telling reporters directly that nothing the committee had said should be read as the Bank edging toward a hike. The majority guidance restates the June framework: tolerate a slower return to target rather than tighten into an external shock, and wait for hard evidence that energy costs are feeding domestic inflation. One dissenter's stated trigger was narrower, resting on the failure of last month's peace framework and the energy volatility that followed.

What the Euro cross gives away

The most useful information Thursday has produced sits on a different pair entirely. Sterling is up roughly 0.2% against the Euro, against 0.71% on the Dollar, and the gain on the cross arrived late, well after the vote. Through the decision and the press conference the Pound was softer against the Euro, at its weakest of the day. A genuine repricing of Britain's rate path would have bought more than 20 pips against a central bank that did nothing at all.

The Dollar side is where this session was actually decided, and it was decided violently. USD/JPY fell more than 400 pips through 160 on suspected intervention that Tokyo has not confirmed, dragging the Dollar Index down around 0.8% to a seven-week low near 100. The 12:30 GMT data batch was an odd one to trade: advance second-quarter Gross Domestic Product (GDP) growth of 1.5% against 2.1% consensus arrived alongside a GDP price index at 6.3% against 3.6%, a growth miss and an inflation shock in one release. Traders took the growth half, helped by a softer core Personal Consumption Expenditures (PCE) print of 0.1% MoM against 0.2%.

The government Sterling has to carry

The Pound's inability to hold a hawkish surprise against the Euro is not a technical accident. Burnham took office as Prime Minister on 20 July, appointed John Healey to the Treasury, and opened with language about finding flexibility within the inherited fiscal rules. Gilt yields answered immediately, with the 10-year moving above 5% and the 30-year near 5.75%, among the highest in the G7.

That is the difference between a hawkish central bank and a hawkish central bank in a country carrying a funding question. Higher British rates currently read as risk premium rather than yield attraction, and roughly 24 billion Pounds of trailed spending and tax measures ahead of an October Budget keeps that reading intact. Until the Budget resolves that, Sterling will keep converting good news into small gains and bad news into large ones.

What lands next

Friday brings the Employment Cost Index (ECI) for the second quarter at 12:30 GMT, consensus 0.8% against 0.9% previously, then the Chicago Purchasing Managers Index (PMI) at 13:45 GMT and the Michigan sentiment and inflation expectations series at 14:00 GMT. Month-end rebalancing flows land the same day and tend to distort the final hours of a large directional move.

Next week is a United States labour week with nothing of consequence on the British side. The Institute for Supply Management (ISM) manufacturing survey arrives Monday at 14:00 GMT against a 53.3 previous reading, the private payrolls report and the ISM services survey follow on Wednesday, and Nonfarm Payrolls land on Friday at 12:30 GMT against a 57K previous. A regional Federal Reserve president speaks late Thursday.

Futures put a September Federal Reserve hike at 63%, lift that to 90% by the late October meeting, and price one increase in full by December, with a second running near 37% by that date. Add three dissents of its own and a chair who has withdrawn forward guidance entirely, and payrolls carries more weight than usual. GBP/USD is a Dollar instrument until the Bank of England meets again in September, and that is the honest read of a session in which Sterling's own central bank surprised on the hawkish side and the Pound collected 20 pips on the Euro for it.

Levels and bias

Resistance: First at 1.3500, immediately above the session high. A daily close above there opens 1.3550, with the mid-July spike area near 1.3650 the next meaningful obstacle.

Support: 1.3400 is the pivot now, with the converged moving averages sitting between 1.3350 and 1.3400 just beneath it. A break below 1.3400 puts 1.3300 back in play, then 1.3250.

Bias: Bullish while 1.3400 holds, targeting 1.3550. The daily Stochastic Relative Strength Index (Stoch RSI) near 33 leaves room above rather than arguing against the move, though ownership of this rally belongs to the Dollar and not to Sterling. A break back below 1.3400 returns the pair to the range that has contained it since May and to 1.3300.

GBP/USD daily chart

• USD/CHF falls to ten-day low as intervention speculation hits Dollar.
• Bullish structure holds while price stays above 50-day SMA.
• Break below 0.8010 exposes 0.8000 and deeper SMA supports.

The USD/CHF retreats for the second straight day, down more than 1% amid growing speculation of an intervention in the FX markets, which boosted the Japanese Yen. The pair fell to a 10-day low of 0.8039, slightly above the 50-day Simple Moving Average (SMA) at 0.8027. As of writing, the pair meanders around 0.8250.

USD/CHF Price Forecast: Technical outlook

Despite its retreat, USD/CHF remains upward-biased. The market structure indicates that the uptrend remains intact as long as spot prices are above the 50-day SMA and the July 10 cycle low of 0.8010.

The Relative Strength Index (RSI) turned bearish. Hence, with price action revealing that bulls are still in charge, while the RSI is bearish, caution is warranted.

For a bullish resumption, USD/CHF needs to clear 0.8100. Above this area lies the high of the day (HOD) at 0.8175, ahead of 0.8200. If price registers a decisive break, the yearly high of 0.8207 might be up for grabs.

Downwards, a breach below the 50-day SMA and 0.8010 opens the door to a break of 0.8000. Below, the bullish market structure would be broken, opening the door for further downside. The next support would be the 100-day SMA at 0.7950, followed by the 200-day SMA at 0.7922.

USD/CHF Chart – Daily

Here is what you need to know for Friday, July 31:

The US Dollar (USD) falls sharply during the American session on Thursday after United States economic growth missed expectations and underlying inflation moderated. Additional pressure comes from a sudden surge in the Japanese Yen (JPY), which fuels speculation that Japanese authorities intervened in the foreign exchange market.

The US Dollar Index (DXY) declined around 0.8% and trades near 100.00, falling below the psychological 100.00 level. Preliminary US Gross Domestic Product expanded at an annualized rate of 1.5% in the second quarter, below the 2.1% market forecast. Core Personal Consumption Expenditures inflation rose only 0.1% MoM in June, compared with expectations of 0.2%, while the annual rate eased to 3.3% from 3.4%.

US data were not entirely weak, as Initial Jobless Claims came in at 197K, below the expected 200K. The GDP Price Index also surged 6.3%, well above the 3.6% forecast, suggesting that inflationary pressures remain elevated despite slower economic growth.

EUR/USD advances around 0.5% and trades near 1.1530, reaching its highest level in several weeks. Eurozone GDP expanded 0.4% QoQ in the second quarter, twice the expected 0.2%, while annual growth accelerated to 1.0%. Spain led the regional expansion with quarterly growth of 0.7%, while Germany, France and Italy each grew 0.2%. German annual inflation also accelerated to 2.8%, supporting expectations that the European Central Bank will remain cautious about further monetary easing.

GBP/USD rises around 0.8% and trades near 1.3470 after the Bank of England delivered a hawkish hold. The BoE maintained its Bank Rate at 3.75%, but three policymakers voted for a 25-basis-point increase, compared with expectations for two. The 6–3 decision indicated that concerns about persistent inflation remain significant among Monetary Policy Committee members.

USD/JPY plunges around 2.4% and trades near 159.50 as the Japanese Yen strengthens abruptly across the market. The speed and scale of the movement raise speculation that Japan’s Ministry of Finance instructed the Bank of Japan to purchase Yen, although the operation has not been officially confirmed. Investors will closely monitor comments from Japanese authorities ahead of Friday’s BoJ policy announcement.

AUD/USD surges around 1.1% and trades near 0.7030, moving above the 0.7000 psychological level. The Australian Dollar benefits from broad Greenback weakness and improved demand for risk-sensitive currencies following the softer US growth and monthly inflation figures.

West Texas Intermediate (WTI) Oil falls around 0.7% and trades near $84 per barrel. Crude prices struggle to retain their recent gains as concerns about slower US economic growth offset continued geopolitical uncertainty and potential risks to Middle Eastern energy supplies.

Gold rises around 1.1% and trades near $4,113 per troy ounce, supported by the weaker US Dollar and softer core PCE reading. Silver outperforms, gaining almost 3% and climbing toward $59.20 per ounce as demand for precious metals strengthens.

On Friday, the Bank of Japan is expected to keep its interest rate unchanged at 1%. Attention will focus on the Monetary Policy Statement, quarterly Outlook Report and press conference for signals about further rate increases and comments regarding the Yen’s sudden appreciation.

The European calendar will feature preliminary Eurozone inflation data. Core Harmonized Index of Consumer Prices inflation is expected to remain at 2.4% YoY, while headline inflation is forecast to accelerate to 2.9% from 2.8%. Germany will publish unemployment figures, while France and Italy will release preliminary inflation data.

In the United States, the Employment Cost Index is expected to rise 0.8% in the second quarter. Investors will also monitor the Chicago PMI, final Michigan Consumer Sentiment and one-year and five-year consumer inflation expectations. Canada will publish monthly GDP, which is forecast to grow 0.2% in May.

TD Securities’ Senior Asia Economist Alex Loo assesses the July Politburo meeting, noting no major new stimulus despite acknowledged growth challenges. The focus is on fiscal execution, accelerating spending and bond use to support the Six Networks infrastructure program. Loo expects stronger fiscal implementation to lift China’s GDP growth to 4.6% in 2026, with potential off-cycle stimulus if US-China trade tensions escalate.

Politburo signals cautious policy stance

"As we expected, the Politburo (China's top leadership) refrained from announcing any large-scale stimulus plans since growth risks haven't worsened materially."

"The Politburo's focus is squarely on policy execution for H2 2026, especially on fiscal implementation as the Politburo called for an acceleration in the "pace of fiscal spending and bond fund utilization to vigorously promote the construction of key projects and new infrastructure, as well as new social development initiatives"."

"For 2026, the broad budget deficit (combination of official deficit, special local government bond quota, and special sovereign bond) is estimated at CNY11.8tn, similar to 2025. Meeting this full-year target implies another CNY7.2 trillion (5.2% of GDP), which is a substantial fiscal impulse and could boost GDP growth in the second half."

"If authorities manage to ramp up fiscal execution, we expect GDP growth to recover from the 4.3% y/y in Q2, and we expect full-year GDP growth to land at 4.6%, in line with the GDP target range for 2026 at "4.5-5.0%"."

"In this scenario, we would expect China to respond tit-for-tat, and a further escalation would likely prompt a fresh stimulus announcement at the October Politburo Economic meeting in the form of a supplementary budget like in October 2023."

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

RaboResearch highlights Oil as the dominant input for UK monetary policy. The Bank of England’s central forecast assumes Oil prices fall from $76 to around $71, with inflation peaking near 3.2%, but Brent already trades above $90. A severe scenario with Oil at $100 implies inflation at 4% or higher, underscoring upside risks for UK assets.

Energy path shapes BoE outlook

"Oil remains of course the swing factor, but the bar for a September hike still looks high."

"In the central case, based on the oil futures curve in the first half of July, oil prices fall from $76 in the third quarter to around $71 by the end of the forecast period."

"Indeed, in the severe scenario (also in Table 1), oil rises to $100 and stays there, which is closer to today’s starting point than the central forecast."

"The takeaway is clear: the most important input for UK monetary policy right now is oil, and oil is both impossible to forecast with confidence and completely outside the UK’s control."

"We think monetary policy will respond only if a lasting energy shock starts to feed into wages, prices or expectations."

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

Commerzbank FX & Commodity Analyst Volkmar Baur argues that China’s large trade surplus, driven increasingly by green technology exports, is supporting a stronger Chinese Yuan. The bank expects USD/CNY to remain in a 6.75–6.80 range near term, with a gradual appreciation of the CNY against the US Dollar, while EUR/CNY is forecast to rise as the Euro strengthens.

Trade surplus underpins CNY stability

"China therefore remains in the comfortable position of posting a high foreign trade surplus. As a result, large sums of foreign currency continue to flow into the country each month, seeking investment opportunities."

"A look at the foreign currency settlement data from Chinese banks shows that significantly more US dollars are still entering the Chinese banking system each month than are leaving it. Consequently, Chinese state-owned banks in particular continue to build up their foreign exchange reserves."

"The stable performance of the CNY is therefore likely to continue in the coming months, as this is in line with the Chinese government’s wishes. For most of the past two and a half months, the USD/CNY exchange rate has moved sideways between 6.75 and 6.80."

"Looking ahead, we expect the CNY to continue to move within this range. We still expect a slight appreciation - albeit at a slower pace than before - against the US dollar to support the internationalization of the RMB."

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

• XAG/USD rises for second day, reclaiming the $59.00 handle.
• RSI improves from bearish territory, though conviction remains limited.
• Failure below $56.64 exposes the yearly low at $54.77.

Silver price advances for the second straight day and hits a three-day high above $59.00mid growing speculation of intervention in the foreign exchange markets, to boost the Yen, and weaken the Greenback. At tht time of writing, XAG/USD trades at $59.22                                                                                           

XAG/USD Price Forecast: Technical outlook

The white metal, enjoyed eight days of consolidation, with no clear bias. However, the XAG/USD began to show signs of life, after reclaiming $59.00, though still respecting the downward market structure.

The Relative Strength Index (RSI) shows that neither buyer nor sellers are in charge, even though it sits in bearish territory. Worth noting that the index is aiming higher, since four trading days ago.

For a bullish continuation, the XAG/USD must clear the psychological $60.00 mark. A breach of the latter exposes the July 22 peak at $60.94, before challenging $61.00.

Downwards, sellers, must drag Silver below the July 28 daily low of $56.64, before the white metal tumbles and test the yearly low of $54.77.

XAG/USD Price Chart – Daily

• Gold rallies as suspected Yen intervention drives Dollar sharply lower.
• Softer US GDP and PCE data ease Fed hike bets.
• Warsh’s vague guidance keeps long-end yield premium elevated.

Gold price advances some 0.92% on Thursday after the US Dollar drops following a suspected intervention in the foreign exchange markets, with the Japanese Yen hitting a near two-month high versus the Greenback. The XAU/USD trades at $4,100 after bouncing off the low of the day (LOD) at $4,028.

XAU/USD climbs above $4,100 as Dollar weakness, softer growth and reduced Fed hike odds support Bullion

The Greenback tumbles nearly 0.90% as the US Dollar Index (DXY), which measures the buck’s value against a basket of six currencies, exchanges hands at 99.90. Speculation that Japanese authorities intervened in the FX markets boosted the precious metal to a five-day high of $4,126.

US inflation came as expected, according to the Bureau of Economic Analysis. The Fed’s preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index in June, ticked lower from 3.4% to 3.3% YoY as expected. The headline PCE slowed from 4.1% to 3.7% YoY, as expected.

Other data showed that the US economy grew more slowly than expected, according to the Commerce Department. The Gross Domestic Product (GDP) for Q2 2026 missed forecasts of 2.1% growth, coming in at 1.5%, due to a widening trade deficit.

Last Wednesday, the Fed held rates unchanged, though the decision was not unanimous. A 9-3 vote split revealed that three Fed Regional Bank Presidents dissented in favour of a 25-basis-point rate hike.

US jobless claims increased below estimates last week, hinting that the labour market remains solid.

Also, the new Fed Chair, Kevin Warsh, emphatically stated that tackling inflation is the priority, though he dodged questions about how the Fed will do its job. The lack of clarity and forward guidance pushed the premium on the US 30-year bond yield to a level last seen in 2007 near 5.21%.

Money markets trimmed their Fed-hawkish bets for September. Instead, the odds of a rate hike are a slim, 30%, while the chances of a hold have risen sharply to 70%, according to Prime Terminal data.

However, the resumption of hostilities in the Gulf War could lead to higher energy prices. West Texas Intermediate (WTI), the US Crude benchmark, is down 1% during the day at $83.59, but is up nearly 20% in July so far. 

On Friday, the US economic docket will feature University of Michigan Consumer Sentiment.

XAU/USD technical outlook: Gold recovers $4,100, eyes on $4,150

Gold’s price continues to trade sideways, despite registering two days of solid gains, clearing the $4,100 mark. Momentum turned bullish as the Relative Strength Index (RSI) pierced above the 50 neutral level, an indication that buyers are moving in.

For a bullish continuation, buyers must clear the July 22 daily high at $4,165, which would open the path to test the 50-day Simple Moving Average (SMA) at $4,194. Above sits the July 6 peak at $4,202.

Downward, the first XAU/USD support is $4,100. A breach of the latter will expose the July 24 (LOD) at $4,022. This comes ahead of the psychological $4,000 level and then the June 17 daily low at $3,959.

MUFG’s Lloyd Chan highlights that Malaysia’s solid growth, low inflation and prudent policy are supporting the Ringgit, but rising domestic political risks could drive USD/MYR in coming months. Despite strong external demand and contained inflation, state election outcomes and coalition dynamics may add a risk premium to the Ringgit and trigger temporary weakness.

Ringgit supported but politics key

"The combination of high US yields, geopolitical risks in the Middle East, and rising domestic political risks are putting some near-term downward pressure on the ringgit. While our base case is for the Middle East conflict to be contained rather than developing into a full-blown regional war, oil supply disruptions could keep inflation concerns alive globally and delay Fed easing. Indeed, tanker flows through Hormuz have collapsed after the June ceasefire Memorandum of Understanding between US and Iran collapsed early this month."

"However, we look for ringgit weakness to be contained, given Malaysia's supportive growth backdrop, contained inflation, strong external sector, and prudent policymaking, which should help prevent disorderly currency depreciation."

"From a currency perspective, authorities have also demonstrated a willingness to smooth recent excessive FX volatility. Similar to measures implemented in 2024, we expect continued efforts to encourage export conversion and repatriation flows by government linked corporates should the ringgit come under excessive pressure."

"While economics remains supportive, domestic political developments could become a more important driver of USD/MYR over the coming months. Political uncertainty surrounding state elections, party coalition dynamics, or speculation around the timing of a future general election could generate periods of temporary ringgit weakness. Following the Johor state election on 11 July where the ruling PH coalition party has a poor showing, the upcoming Negeri Sembilan state election on 1 August will serve as a key political signal."

"Heightened election and political uncertainty could introduce a higher risk premium on the ringgit."

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