Forex News
United Overseas Bank’s (UOB) Quek Ser Leang and Lee Sue Ann highlight that AUD/USD strength remains intact after a jump to 0.7129, though overbought conditions should confine intraday moves to a 0.7090–0.7130 band. The 1–3 week bias stays to the upside, with the next level to monitor at 0.7150, while strong support is placed at 0.7070.
Australian Dollar stays supported but stretched
"24-HOUR VIEW: AUD soared to a high of 0.7095 last Friday. When it was at 0.7080 yesterday, we indicated that “while further AUD strength is not ruled out, overbought conditions suggest 0.7100 could be just out of reach.” The anticipated AUD strength exceeded our expectation as it popped to a high of 0.7129 before retreating to close at 0.7104 (+0.32%). Despite the retreat, AUD strength appears to be intact. That said, overbought conditions suggest any advance is likely to be contained within a range of 0.7090/0.7130."
"1-3 WEEKS VIEW: We have held the view that “the risk for AUD is on the upside” since early this month. Yesterday (17 Aug, spot at 0.7080), we reiterated our view, indicating that “the risk for AUD remains on the upside but note that AUD must surpass 0.7100 before a move to 0.7120 can be expected.” We did not expect AUD to quickly break above both 0.7100 and 0.7120, as it popped to a high of 0.7129 before retreating. The risk remains on the upside, and the next level to monitor is 0.7150. Overall, only a breach of 0.7070 (‘strong support’ level was at 0.7050 yesterday) would mean that the upside risk has faded."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
ING’s Chris Turner reports a firmer EUR/GBP after UK labour data, with economist James Smith highlighting a cool jobs market and minimal wage pressures, implying little impetus for Bank of England hikes this year. Sterling money markets still price 60bp of BoE tightening into next year, which Turner expects to be gradually priced out, with EUR/GBP biased toward 0.8570/0.8580.
Jobs data temper BoE expectations
"EUR/GBP has opened up a little firmer on the release of the latest jobs data."
"Nothing particularly earth-shattering in the latest UK jobs figures. Payrolled employment is down a touch – though this masks big differences between government (which is still actively hiring), consumer services (where job numbers are consistently falling and the pace of decline is getting worse) and the remaining private sector, which is flatlining."
"The unemployment rate is up a touch, though the ONS has already revealed there are temporary sampling issues with the labour force survey underpinning it (on top of the well-publicised existing problems), so I'd take that data with a pinch of salt."
"Still, the basic story is the same – the jobs market remains cool, and wage pressures are fairly minimal. It suggests little impetus for the Bank of England to hike rates this year."
"The sterling money market curve still prices 60bp of Bank of England hikes into next year. That should slowly be priced out over the next three to six months, although energy prices will have a big say on timing. Next on the UK agenda this week will be tomorrow's July CPI, where a lower year-on-year services number would again slightly favour the position of the BoE doves."
"EUR/GBP looks biased to the 0.8570/80 area."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- USD/JPY extends gains to hit fresh two-week highs at 159.75.
- Soft Japanese GDP data cast doubts about the BoJ's monetary tightening pace.
- Rising geopolitical tensions are providing support for the safe-haven US Dollar this week.
The Japanese Yen (JPY) accelerates its decline as the US Dollar (USD) draws support from a sourer market mood, with investors wary of a re-escalation of tensions in the Middle East. The USD/JPY pair appreciates for the second consecutive day, reaching the 159.75 area and drawing closer to the 160.00 level, considered a line in the sand for Tokyo authorities.
Markets are on a risk-off mood on Tuesday as the Memorandum of Understanding signed by the US and Iran in June expired on Monday, with both parties still far from a durable peace agreement.
Beyond that, Washington and Iran have ramped up their threats. US President Donald Trump threatened to bomb Oman, hitherto an ally, if it “gets in the way” of an agreement with Iran. Iranian authorities, in turn, announced that they would shift to a “fully offensive” military stance, further straining an already fragile ceasefire and hammering investors' appetite for risk.
Soft Japanese data has undermined support for the Yen
In Japan, Gross Domestic Product (GDP) figures released on Monday missed expectations, as economic growth slowed to 0.3% in the second quarter, down from 0.5% in the previous quarter, casting some doubt on the pace of the Bank of Japan’s (BoJ) monetary tightening cycle.
Looking ahead, Analysts at UOB Group observe that the US Dollar's “underlying tone still appears to be firm, and the bias remains tilted to the upside.” UOB, however, expects price action to remain contained in the near-term, judging that “a narrower range of 158.00/160.20 is likely enough to contain the price movements.”
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.
OCBC’s Sim Moh Siong and Christopher Wong highlight that still-attractive US Dollar (USD) carry and softer United States (US) data, which have reduced the odds of a September Fed hike, should keep the Dollar rangebound. They argue that as long as long-end US yields do not rise significantly further, risk assets and carry trades should stay supported. Markets now focus on the July FOMC minutes for clarity on Fed inflation views and rate intentions.
Fed expectations and carry trades
"Oil, yields and geopolitics are keeping markets on edge. Still, reduced Fed tightening expectations should keep the USD rangebound and preserve support for carry trades."
"The combination of still-attractive USD carry and a pause in the USD's bullish momentum, following softer US economic data that has reduced the likelihood of a September Fed hike, should keep the greenback rangebound in the near term."
"Provided long-end US yields do not rise significantly further, the broader risk backdrop should remain supportive of carry trades."
"This week's key event is the release of the July FOMC minutes. Markets will look for greater clarity on policymakers' inflation views and the extent of support for keeping rates unchanged, beyond the three regional Fed presidents reportedly favouring higher rates."
"While the minutes have been partly overtaken by softer July labour market and inflation data, they remain important given the Fed's limited forward guidance on interest rates."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- Silver price wobbles near $65.30 with FOMC minutes in focus.
- The impact of receded hawkish Fed bets has been offset by surging oil prices.
- Soft US data forces traders to pare back hawkish Fed bets.
Silver price (XAG/USD) continues to trade in a limited range at around $65.30 during the European trading session on Tuesday. The white metal has been trading sideways in a range between $63.50 and $66.80 for a week, as the impact of traders pricing out hawkish Federal Reserve (Fed) bets has been offset by de-anchored global inflation expectations on the back of disrupted energy supply.
Traders don’t expect the Fed to deliver an interest rate hike in the September policy meeting due to weak United States (US) economic data for July.
Fed hike odds fade, but upside risks linger
BNY Markets’ John Velis notes that “December rate hike expectations continue to recede this past week thanks to well-behaved inflation data and a surprise drop in consumers’ retail spending.” He points out that “current expectations for the end of the year show less than a full chance of a hike, while the very next meeting, September 16, has around 30% priced in, down from over 70% at the beginning of August.” Velis argues that this shift in pricing “reinforces our view of no moves this year,” but cautions that “there’s always a risk geopolitics will heat up further and send energy prices – and headline inflation – higher.” As a result, while BNY “continue to expect no hikes this year,” they “also continue to acknowledge that the risk is to the upside, especially with hawks on the Committee publicly pushing for hikes.”
Meanwhile, a further increase in oil prices due to the non-renewal of the US-Iran ceasefire has prompted further increases in global inflation projections. Higher energy prices prompt fears of interest rate hikes by global central banks, a scenario that diminishes the appeal of non-yielding assets, like Silver.
Going forward, the major trigger for the Silver price will be the Federal Open Market Committee (FOMC) minutes of the July policy meeting, which will be released on Wednesday.
Silver Technical Analysis
XAG/USD trades in a tight range at around $65.26 for a week. The pair holds above the 20-day Exponential Moving Average (EMA) at $62.53, keeping a constructive bullish bias as price extends away from its short-term trend base.
The Relative Strength Index (14) at 59.32 remains in positive territory but shy of overbought conditions, suggesting firm upside momentum without yet signaling exhaustion.
On the downside, immediate support is seen at the lower end of the last week's trading range near $63.50, with stronger underlying demand emerging at the 20-day EMA around $62.53. On the upside, the Silver price would see a fresh upside move towards $70.00 if it manages a decive breakout of the ongoing consolidation.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- USD/CAD lacks a firm intraday directional bias on Tuesday amid a combination of diverging forces.
- Rising oil prices underpin the Loonie, while hawkish Fed bets provide a goodish lift to the USD.
- The technical setup favors bearish traders and backs the case for a further near-term depreciation.
The USD/CAD pair struggles to capitalize on the overnight bounce from its lowest level since June 3, around the 1.3845 zone, also representing the 200-day Simple Moving Average (SMA) support, and oscillates in a narrow band on Tuesday. Spot prices extend the range-bound price action through the early European session and currently trade around the 1.3870-1.3875 region, unchanged for the day amid mixed cues.
Crude oil prices climb to an over two-week high amid the US-Iran standoff over the Strait of Hormuz. This, along with Monday's hot Canadian consumer inflation figures, continues to underpin the commodity-linked Loonie and acts as a tailwind for the USD/CAD pair. The downside, however, remains cushioned amid a strong follow-through US Dollar (USD) recovery from a two-month low, bolstered by bets for at least one rate hike by the US Federal Reserve (Fed) on the back of oil-driven inflation risks.
Meanwhile, momentum indicators suggest that bearish sentiment dominates even as spot prices stabilize above the longer-term trend support. In fact, the Relative Strength Index (14) sits in oversold territory near 29, hinting at stretched downside conditions, while the Moving Average Convergence Divergence (MACD) indicator remains below zero with negative readings. Moreover, the USD/CAD pair has found acceptance below the 50% Fibonacci retracement level of the April-June rally, validating the negative outlook.
However, a convincing break below the 200-day SMA at 1.3848 is needed to back the case for deeper losses to the 61.8% Fibo. level at 1.3822. Some follow-through selling would expose the 78.6% level at 1.3708, before the USD/CAD pair extends the fall toward the structural floor near 1.3562.
On the topside, initial resistance is located at the 50.0% retracement at 1.3902, followed by the 38.2% level at 1.3982 and then the 23.6% retracement at 1.4081, with the cycle high anchor around 1.4242 acting as a more distant barrier.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/CAD daily chart
Canadian Dollar FAQs
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
The Bank of Canada (BoC) has a significant influence on the Canadian Dollar by setting the level of interest rates that banks can lend to one another. This influences the level of interest rates for everyone. The main goal of the BoC is to maintain inflation at 1-3% by adjusting interest rates up or down. Relatively higher interest rates tend to be positive for the CAD. The Bank of Canada can also use quantitative easing and tightening to influence credit conditions, with the former CAD-negative and the latter CAD-positive.
The price of Oil is a key factor impacting the value of the Canadian Dollar. Petroleum is Canada’s biggest export, so Oil price tends to have an immediate impact on the CAD value. Generally, if Oil price rises CAD also goes up, as aggregate demand for the currency increases. The opposite is the case if the price of Oil falls. Higher Oil prices also tend to result in a greater likelihood of a positive Trade Balance, which is also supportive of the CAD.
While inflation had always traditionally been thought of as a negative factor for a currency since it lowers the value of money, the opposite has actually been the case in modern times with the relaxation of cross-border capital controls. Higher inflation tends to lead central banks to put up interest rates which attracts more capital inflows from global investors seeking a lucrative place to keep their money. This increases demand for the local currency, which in Canada’s case is the Canadian Dollar.
Macroeconomic data releases gauge the health of the economy and can have an impact on the Canadian Dollar. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the CAD. A strong economy is good for the Canadian Dollar. Not only does it attract more foreign investment but it may encourage the Bank of Canada to put up interest rates, leading to a stronger currency. If economic data is weak, however, the CAD is likely to fall.
Here is what you need to know on Tuesday, August 18:
Financial markets cling to a cautious stance early Tuesday as tensions in the Middle East re-escalate. In the second half of the day, the US economic calendar will feature housing data, alongside Import Price Index, Export Price Index and Industrial Production figures for July.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.10% | 0.14% | 0.19% | -0.01% | 0.10% | 0.43% | 0.10% | |
| EUR | -0.10% | 0.04% | 0.11% | -0.11% | 0.00% | 0.33% | 0.01% | |
| GBP | -0.14% | -0.04% | 0.04% | -0.14% | -0.04% | 0.31% | -0.03% | |
| JPY | -0.19% | -0.11% | -0.04% | -0.19% | -0.09% | 0.25% | -0.08% | |
| CAD | 0.01% | 0.11% | 0.14% | 0.19% | 0.10% | 0.45% | 0.11% | |
| AUD | -0.10% | -0.00% | 0.04% | 0.09% | -0.10% | 0.34% | 0.00% | |
| NZD | -0.43% | -0.33% | -0.31% | -0.25% | -0.45% | -0.34% | -0.32% | |
| CHF | -0.10% | -0.01% | 0.03% | 0.08% | -0.11% | -0.01% | 0.32% |
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).
The US Dollar (USD) started the week on a bearish note as investors continued to scale back bets for a Federal Reserve (Fed) policy tightening in September following the previous week's disappointing data releases. In turn, the USD Index dropped to its weakest level since early June below 99.50 before staging a rebound in the late American session. In the European morning on Tuesday, the USD Index stays in positive territory at around 99.70.
US President Donald Trump said on Monday they are not seeking an extension of the Memorandum of Understanding, which expired on Monday. Additionally, in an interview with Fox News, Trump reportedly threatened to bomb Oman if it gets in the way of his administration's negotiations with Iran. In the meantime, the UK Maritime Trade Operations (UKMTO) reported early Tuesday that a vessel was struck by an "unknown projectile" wile passing through the Strait of Hormuz. After rising more than 3% on Monday, the barrel of West Texas Intermediate (WTI) continues to push higher and was last seen trading near $84.70, rising 0.7% on the day. Moreover, the benchmark 10-year US Treasury bond yield advance to its highest level since January 2025 near 4.75% on heightened Middle East risks, further supporting the USD.
Dollar carry and steady yields seen keeping risk appetite supported
Analysts at OCBC argue that the "combination of still-attractive USD carry and a pause in the USD's bullish momentum, following softer US economic data that has reduced the likelihood of a September Fed hike, should keep the greenback rangebound in the near term." They add that, "provided long-end US yields do not rise significantly further, the broader risk backdrop should remain supportive of carry trades," reinforcing the view that current market conditions continue to favour yield-seeking strategies.
After climbing to a fresh two-month high above 1.1600, EUR/USD corrects lower on Tuesday and was last seen trading at around 1.1570.
The UK's Office for National Statistics (ONS) reported earlier in the day that the ILO Unemployment Rate held steady at 4.9% in the three months to June. In this period, Employment Change increased by 83K, while annualized wage inflation, as measured by the change in the Average Earnings Excluding Bonus, edged higher to 3.5%. GBP/USD stays under modest bearish pressure and edges lower toward 1.3500 after closing flat on Monday. On Wednesday, the ONS will publish July inflation data.
USD/JPY trades modestly higher on the day at around 159.80 to start the European session on Tuesday.
Gold loses its traction after rising nearly 1% on Monday and trades slightly below $4,400.
The data from Canada showed on Tuesday that the Consumer Price Index (CPI) rose by 3% on a yearly basis in July. This print followed the 2.8% increase recorded in June and came in above the market expectation of 2.9%. USD/CAD stays in a consolidation phase below 1.3900 after ending the day virtually unchanged on Monday.
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.
Deutsche Bank strategists note that rising oil prices are reinforcing stagflation concerns and weighing on equities globally. The S&P 500 posted its worst session of August so far as market breadth weakened sharply, while European shares also declined and the negative momentum extended into Asian markets overnight.
Stagflation pressure hits equities
"Indeed, Brent crude oil (+2.65%) closed above $90/bbl yesterday for the first time in two weeks, and this morning we’ve seen a further +0.72% rise to $91.52/bbl. So that’s led to pressure across the board, with the S&P 500 (-0.52%) slipping back, and futures are pointing to another -0.32% decline today. "
"For equities, the stagflationary impulse from higher oil prices meant it was a similar story of declines on both sides of the Atlantic. So by the close, the S&P 500 (-0.52%) posted its worst day of August so far, and it would have been worse had it not been for a rebound in chip stocks, as the Philly semiconductor index closed up +1.64% on the day."
"Otherwise though, the S&P 500 saw the most daily decliners (367) since early July as all major sector groups except energy fell on the day, and the equal-weighted index (-0.92%) also had its worst day in over a month."
"Over in Europe, markets closed before the weakening fully played out, but the STOXX 600 (-0.22%) still posted a 4th consecutive decline, alongside bigger losses for the DAX (-0.38%) and the CAC 40 (-0.66%)."
"That negative trend has been clear overnight in Asia, where most of the major indices have lost ground this morning, including the Nikkei (-1.64%), the KOSPI (-0.60%), the Hang Seng (-0.65%), CSI 300 (-0.79%) and the Shanghai Comp (-0.39%)."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/GBP trades with mild gains around 0.8550 in Tuesday’s early European session.
- UK Unemployment Rate held steady at 4.9%, worse than expected.
- Euro support underpinned by Eurozone resilience.
The EUR/GBP cross posts modest gains near 0.8550 during the early European trading hours on Tuesday. The British Pound (GBP) attracts some sellers against the Euro (EUR) following the UK employment data. Traders brace for the ZEW Survey from Germany and the Eurozone later on Tuesday. On Wednesday, the attention will shift to the UK inflation report.
Data released by the Office for National Statistics (ONS) on Tuesday showed that the UK Unemployment Rate steadied at 4.9% in the three months to June. The figure came in above the market consensus of 4.8%.
Meanwhile, the number of people claiming jobless benefits declined by 11K in July, versus a revised decrease of 6.4K prior and the market expectations of a 11.2K gain. The Employment Change data arrived at 83K in June, compared to 147K seen in May.
The British Pound edges lower in an immediate reaction to the UK jobs data. Financial markets on Monday showed one 25 basis points (bps) interest rate hike priced by the end of 2026, according to Reuters.
On the Euro front, Scotiabank analysts believe that the recent “firming trend in the EUR reflects economic resilience in the Eurozone despite headwinds from energy. The European Central Bank (ECB) is likely to raise interest rates by 25 bps at its September monetary policy meeting. ECB president Christine Lagarde warned last month that renewed Middle East hostilities and the resultant rebound in oil prices pose upside risk to the Eurozone inflation outlook.
Technical Analysis: EUR/GBP remains capped under the 100-day SMA
In the daily chart, EUR/GBP keeps a mildly bearish near-term tone as it holds beneath the 100-day simple moving average (SMA) and the 20-day Bollinger middle band. Price is also trading below the upper Bollinger band, while the Relative Strength Index (14) around 48.5 signals neutral momentum, hinting that downside pressure persists but lacks strong conviction for a sharp selloff.
On the downside, initial support is aligned with the lower Bollinger band at 0.8530, where sellers could begin to take profits if the pair extends its retreat. On the topside, immediate resistance emerges at the 20-day Bollinger SMA around 0.8555, followed by the upper Bollinger band near 0.8582, with a more significant cap at the 100-day SMA at 0.8620; only a sustained break above this cluster of overhead levels would ease the current bearish bias.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
- GBP/USD dips to levels near 1.3520 on Tuesday following rejection at 1.3570.
- UK Unemployment Rate remained steady at 4.9% in the three months to June, against expectations of a decline to 4.8%.
- Risk aversion is buoying the US Dollar, as the MoU between the US and Iran draws to an end.
The British Pound (GBP) extends its reversal against the US Dollar (USD) on Tuesday as June’s UK unemployment data fails to convince investors in an already risk-off market, as tensions in the Middle East rise. The GBP/USD trades at 1.3522 at the time of writing, following rejection at the 1.3570 area on Monday.
UK ILO Unemployment remained steady at 4.9% in the three months to June, against expectations of a decline to 4.8%, according to data released by National Statistics on Tuesday. Employment increased by 83K, well below the 147K rise posted in May. On the positive side, unemployment claims declined by 11K, against expectations of a 11.2K rise following a downwardly revised 6.4K decline in the previous month
Wage inflation accelerated, with Average Earnings Excluding Bonus increasing by a 3.5% yearly rate in the three months to June, from 3.4% in the previous months, suggesting that salaries will keep pushing inflationary pressures higher.
Rising geopolitical tensions support the US Dollar
The US Dollar is also drawing some support from risk-off markets, as the Memorandum of Understanding between the US and Iran signed in June ended on Monday, with the peace process stalled and Washington and Tehran ramping up their rhetoric.
US President Donald Trump threatened to bomb Oman, an ally, if it “gets in the way” over the Iran deal, and an Iranian military official said that the country’s armed forces will shift to a “fully offensive” stance.
USD rallies, however, remain limited as the Greenback deals with weaknesses of its own. Strategists at Scotiabank note that “soft US data reports are dampening Fed tightening expectations” while “clear signs of market angst about US fiscal dynamics” are emerging, reflected in “the steepening US yield curve.”
Looking ahead, Scotiabank sees the Greenback biased lower in the near-term: “The retreat in Fed tightening expectations and steeper yield curve are enough to put the USD under pressure in the near-term and drive the DXY back to the 97.5/98.5 range.”
Economic Indicator
ILO Unemployment Rate (3M)
The ILO Unemployment Rate released by the UK Office for National Statistics is the number of unemployed workers divided by the total civilian labor force. It is a leading indicator for the UK Economy. If the rate goes up, it indicates a lack of expansion within the UK labor market. As a result, a rise leads to a weakening of the UK economy. Generally, a decrease of the figure is seen as bullish for the Pound Sterling (GBP), while an increase is seen as bearish.
Read more.Last release: Tue Aug 18, 2026 06:00
Frequency: Monthly
Actual: 4.9%
Consensus: 4.8%
Previous: 4.9%
Source: Office for National Statistics
The Unemployment Rate is the broadest indicator of Britain’s labor market. The figure is highlighted by the broad media, beyond the financial sector, giving the publication a more significant impact despite its late publication. It is released around six weeks after the month ends. While the Bank of England is tasked with maintaining price stability, there is a substantial inverse correlation between unemployment and inflation. A higher than expected figure tends to be GBP-bearish.
Economic Indicator
Average Earnings Excluding Bonus (3Mo/Yr)
The Average Earnings Excluding Bonus release is a key short-term indicator of how levels of pay are changing within the UK economy; it is released by the UK Office of National Statistics. It can be seen as a measure of growth in "basic pay". Generally, a positive result is seen as bullish for the Pound Sterling (GBP), whereas a low reading is seen as bearish.
Read more.Last release: Tue Aug 18, 2026 06:00
Frequency: Monthly
Actual: 3.5%
Consensus: 3.4%
Previous: 3.4%
Source: Office for National Statistics
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