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United Overseas Bank’s (UOB) Quek Ser Leang reports that GBP/USD failed to sustain its recent strong run, pulling back after testing resistance near 1.3410. Short-term price action now points to an extended correction with focus on 1.3330–1.3315 supports, while on a 1–3 week view a break below 1.3315 would signal that the Pound’s latest advance has ended.

Correction eyes 1.3315 strong support

"24-HOUR VIEW: After GBP rose more than we expected on Monday, we highlighted the following yesterday: “Strong momentum suggests further GBP strength toward 1.3410. A break above this major resistance is not ruled out, but based on the prevailing momentum, the next resistance at 1.3445 is likely out of reach. To sustain the momentum, GBP must hold above 1.3350, with minor support at 1.3370.” The subsequent price movements did not unfold as expected. GBP eked out a fresh high of 1.3401 before pulling back sharply to a low of 1.3349. The pullback has scope to extend, but it is currently unclear whether any decline can reach the strong support at 1.3315. Note that there is another support level at 1.3330. On the upside, resistance levels are at 1.3370 and 1.3390."

"1-3 WEEKS VIEW: We have held a positive GBP view since early last week. After GBP rose close to our technical target at 1.3410, we highlighted yesterday (07 Jul, spot at 1.3390) that “a break above 1.3410 will not be surprising and could lead to a move to 1.3445.” We did not expect GBP to pull back sharply, as it closed lower for the first time in eight days (1.3360, -0.23%). Upward momentum has slowed with the pullback, and a breach of 1.3315 (‘strong support’ level was at 1.3300 yesterday), would indicate that the advance in GBP has come to an end."

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

OCBC Bank’s Sim Moh Siong and Christopher Wong highlight that Oil and tech-led equity weakness have driven a stronger US Dollar, higher global yields and softer Gold. They expect Oil prices to decline only gradually, maintaining Brent forecasts at USD75/bbl by end-2026 and USD71/bbl by mid-2027, as a persistent security premium and US-Iran tensions keep inflation and terms-of-trade risks elevated.

Brent path shaped by security risks

"Oil prices and tech-led equity weakness dominated overnight trading. Higher crude prices pushed global bond yields and the USD higher, while gold retreated. Oil rallied amid renewed concerns over US-Iran tensions after Washington revoked its waiver for Iranian oil sales following attacks on three vessels in the Strait of Hormuz."

"Our view remains that the next leg lower in oil prices will be more gradual than the sharp correction seen in 2Q26. We maintain our Brent forecasts of USD75/bbl by end-2026 and USD71/bbl by mid-2027. A persistent security premium reflecting disruption risks is likely to slow the pace of decline."

"A return to full-scale US-Iran conflict appears unlikely given growing US political pressure to keep oil prices contained ahead of the November midterm elections. However, there is still no clear path to fully securing the Strait of Hormuz. For now, the US is likely to rely on economic pressure to retain leverage in ongoing negotiations with Iran. Another key question for oil is whether China will increase imports further, particularly after reports that it has been purchasing discounted Saudi crude."

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

• USD/JPY appreciates for the fourth consecutive day but is meeting resistance at 162.40.
• A new round of US attacks on Iran has hurt risk appetite, providing moderate support to the USD.
• Dovish comments from BoJ's Asada have added pressure on an already weak JPY.

The US Dollar (USD) appreciates against the Japanese Yen (JPY) for the fourth consecutive day on Wednesday, fuelled by the resumption of hostilities in the Middle East and dovish comments from Bank of Japan (BoJ) officials. The Greenback, however, is struggling to break last week’s highs at 162.40 so far.

A new round of US strikes on Iran, in retaliation for alleged attacks from Tehran on vessels closing Hormuz earlier this week, hurt risk appetite on Wednesday. and provided some support to the safe-haven US Dollar,

The Yen, however, is suffering from weakness of its own, as BoJ monetary committee member Toichiro Asada, the dovish dissenter at June’s monetary policy meeting, said that he needs to see signs of demand-driven inflation before supporting interest rate hikes,

Technical Analysis: 162.40 is the last barrier before 40-year highs

USD/JPY trades at 162.26, maintaining its positive structure intact although bulls have been rejected at Monday's high in the area around 162.40. Four-hour charts show the Relative Strength Index (14) easing toward neutral from prior overbought readings, while the Moving Average Convergence Divergence (MACD) remains slightly positive, hinting that upside momentum is still constructive.

On the topside, horizontal resistance at 162.41 (June 6 high) is closing the path towards the 40-year high at 162.85, followed by 162.84. On the downside, initial support appears at Tuesday's low, near 161.70, ahead of the key support area of 160.50, which held bears last week.

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

ING strategists Warren Patterson and Ewa Manthey report that Gold has edged lower after an early advance as traders await the June Federal Open Market Committee (FOMC) minutes, but the metal trades in line with evolving US rate expectations and remains supported above $4,000/oz. Ongoing Strait of Hormuz security concerns and persistent official‑sector buying, led by China, underpin the outlook.

Fed path and China buying in focus

"Gold edged lower in Tuesday’s afternoon trading after an early advance as investors looked ahead to the release of the June Federal Open Market Committee minutes later this week for further clues on the Federal Reserve's policy path. The metal continues to trade largely in line with shifting US rate expectations. Last week's weaker-than-expected jobs data reduced expectations of additional tightening and helped gold stabilise back above the $4,000/oz level."

"Meanwhile, official-sector demand remains supportive. Data from the People's Bank of China showed it increased its gold reserves for a 20th consecutive month in June. This marks its largest monthly purchase since late 2023."

"The continued accumulation highlights China's ongoing efforts to diversify reserves and reinforces a broader trend of strong central bank buying. It should continue to provide an important source of support for gold prices despite recent volatility."

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

Deutsche Bank’s Jim Reid highlights that Asian equities are mostly lower as investors digest a sharp escalation in US-Iran tensions and surging Oil prices. KOSPI is down over 5% and the Nikkei and S&P/ASX 200 are weaker, while mainland Chinese indices and the Hang Seng are firmer on tech gains. S&P, Nasdaq and Stoxx futures are described as broadly flat.

Tech-led divergence across Asia

"Asian equity markets are largely lower this morning as investors digest a significant escalation in US-Iran tensions overnight."

"Against this backdrop, risk sentiment across Asia is weak but not as much as you may have imagined given the attacks. S&P, Nasdaq and Stoxx futures are all pretty much flat with the rest of Asia down or up depending on which side of the tech stack they sit on."

"The KOSPI losses have accelerated as I'm typing, currently down -5.57% in what seem very fast markets with the Nikkei -0.96%, and the S&P/ASX 200 down -0.49%. In contrast, mainland Chinese equities are firmer ahead of tomorrow’s June inflation report, with the CSI 300 (+0.61%) and Shanghai Composite (+0.52%) moderately higher, whilst the Hang Seng (+2.38%) is outperforming as technology stocks there recover."

"As all that was happening, there wasn’t much respite for equities either, as chipmakers saw a renewed slump that took the Philly semiconductor index (-4.65%) to its lowest in nearly a month. Indeed, the index is now -15.95% beneath its highs in mid-June, after just posting its best quarter ever in Q2. To be fair it wasn’t all bad news, and US equities saw a rotation into defensive sectors."

"Energy (+3.02%), healthcare (+1.55%), consumer staples (+0.99%) and utilities (+0.91%) all had a strong performance. Moreover, a majority of the S&P 500’s constituents were still higher, with 283 companies rising on the day. But the chip declines still dragged on the overall performance, with the S&P 500 ultimately down -0.45%"

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

Commerzbank’s Volkmar Baur reports the Reserve Bank of New Zealand (RBNZ) lifted the Official Cash Rate (OCR) to 2.5%, with the New Zealand Dollar (NZD) gaining slightly versus US Dollar (USD). RBNZ’s tone was more hawkish than expected, addressing structural inflation risks, and Commerzbank still looks for one more hike. However, they see market pricing of three additional hikes as excessive, expecting kiwi weakness once expectations are pared back.

Market overpricing future OCR hikes

"As we expected, the Reserve Bank of New Zealand raised the official cash rate (OCR) this morning to 2.5%. The kiwi reacted positively to this move and gained slightly against the USD after having fallen significantly in recent weeks. In its statement, however, the central bank’s tone was, on the whole, perhaps a bit more hawkish than we would have expected."

"We, too, had anticipated a certain hawkish undertone. After all, it is unclear exactly how inflation will develop in the coming months, and the bank naturally does not want to rule out the possibility of raising rates again. We, too, expect the RBNZ to raise the OCR again at one of its next two meetings."

"The RBNZ’s hawkish tone, however, went beyond the inflation shock triggered by the Iran conflict. Structural factors were also addressed that could potentially make it necessary to raise the cash rate further. Low productivity was mentioned here, among other things, as a factor that could structurally increase price pressures."

"We also recognize the problem of low productivity growth. Over the coming months, however, we expect the economy to be too weak to sustain price pressures. Governor Breman is quoted in a similar vein in the statement when she says that high inflation could weigh on household demand."

"We therefore stand by our assessment that, while we expect another rate hike in the coming months, that is all we anticipate. As of today, the market is pricing in three additional OCR hikes over the next 12 months. We believe that is too much. Once the market begins to adjust its expectations in this regard, the kiwi is likely to come under pressure again."

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

• GBP/USD flattens around 1.3355 in the countdown to the FOMC Minutes.
• In the Fed’s June policy meeting, the central bank left interest rates unchanged in the 3.50%-3.75% range.
• Andy Burnham has already confirmed that he will follow the principles of Labour’s manifesto.

The GBP/USD pair trades almost flat at around 1.3355 during the European trading session on Wednesday. The Cable consolidates as investors await the Federal Open Market Committee (FOMC) minutes of the June policy meeting, which will be published at 18:00 GMT.

At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally lower to near 101.05.

Investors will closely read the FOMC Minutes to gauge possible reasons that led officials to abandon forward guidance on the monetary policy outlook. In the policy meeting, the Fed decided to leave interest rates unchanged in the range of 3.50%-3.75%, citing upside inflation risks, and 9 out of 19 policymakers favored an interest rate hike by the year-end.

Meanwhile, the British Pound (GBP) struggles for direction as investors seek fresh cues regarding the United Kingdom’s (UK) fiscal policy outlook under new leadership. However, newly elected Member of Parliament and Mayor of Greater Manchester, Andy Burnham, the front-runner for UK leadership after Prime Minister (PM) Keir Starmer’s resignation, has already stated that he will continue Labour’s manifesto.

GBP/USD technical analysis

GBP/USD trades calmly near 1.3355, holding a mildly bullish bias as it remains above the 20-day exponential moving average (EMA) at 1.3321.

The bounce from the recent 1.32 area and the pair’s ability to stay supported by the short-term EMA hint at a tentative recovery phase, while the Relative Strength Index (RSI) at 52.8 shows modest positive momentum without entering overbought territory.

On the topside, the next significant barrier is the downward resistance trend line, with its break level around 1.3500. Looking down, the immediate support is reinforced by the 20-day EMA at 1.3321, and a daily close back below this level would weaken the current constructive tone and force the pair to revisit the June 24 low at around 1.3140.

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