Forex News
Scotiabank strategists Shaun Osborne and Eric Theoret report USD/JPY is steady but elevated, with recent gains already surpassing prior intervention-trigger levels. A 25 bps Bank of Japan (BoJ) hike on Tuesday is widely anticipated, and markets price nearly one more increase by December. They flag concerns over communication as Governor Ueda will not attend, and see limited resistance up to 162 with support in the 156–158 band.
Limited resistance seen toward 162
"The yen’s ongoing weakness is a worry for market participants, government officials, and central bank policymakers, sparking concerns of intervention in the former as the latter consider the implications for inflation."
"The latest weakness in spot (gains for USD/JPY) have already cleared levels that sparked earlier currency management activities (price checking in January, intervention in late April/early May)."
"Domestic releases have been limited and the calendar is empty ahead of Tuesday’s BoJ rate decision. A 25 bps hike is widely anticipated and markets are pricing nearly one additional hike by December."
"Gov. Ueda is not attending, leaving market participants somewhat concerned about the central bank’s communication specifically the post meeting press conference."
"For USD/JPY, we see limited resistance between current spot and 162 and we would anticipate support in the 156/158 range."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- EUR/USD trades in a narrow range as markets await Tehran's decision on a possible US-Iran agreement.
- Conflicting reports on the proposed US-Iran deal keep markets in a wait-and-see mode.
- Traders look ahead to next week's Federal Reserve meeting under new Chair Kevin Warsh.
EUR/USD fluctuates between modest gains and losses heading into the weekend as traders await Tehran's decision on a possible agreement with the United States (US) to end the war in the Middle East. At the time of writing, the pair trades around 1.1573 and is on track to post modest weekly gains.
Iranian Foreign Minister Abbas Araghchi said a memorandum of understanding (MoU) with the United States has "never been closer." Pakistan's Prime Minister Shehbaz Sharif also said that a final agreed text of a peace deal has been reached and that Islamabad is working closely with both sides to finalize the next steps.
However, uncertainty remains amid conflicting reports over the contents of the MoU, including the release of frozen Iranian funds, the future of Iran's nuclear program and the reopening of the Strait of Hormuz.
As a result, traders are adopting a wait-and-see approach, keeping price action subdued, while the US Dollar (USD) also consolidates. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 99.75.
Apart from geopolitical developments, attention is now turning to next week's Federal Reserve (Fed) monetary policy meeting under newly appointed Chair Kevin Warsh. Warsh takes charge at a challenging time, as elevated Oil prices have stalled the disinflation progress. US CPI accelerated to 4.2% in May, more than double the Fed's 2% target.
While a pause is fully priced in at next week's meeting, the focus will be on the Fed's forward guidance and whether policymakers' outlook aligns with market expectations for rate hikes later this year.
Across the Atlantic, traders are also looking ahead to the Eurozone's inflation data for May. The Harmonized Index of Consumer Prices (HICP) is expected to remain unchanged at 3.2% YoY, after accelerating above the European Central Bank's (ECB) 2% target in recent months.
The ECB raised interest rates by 25 basis points on Thursday, as policymakers respond to mounting price pressure. Any upside surprise in May inflation data would reinforce expectations that the central bank may need to maintain a restrictive policy stance for longer.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named 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 during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Societe Generale notes that Chinese inflation remains subdued, with May Consumer Price Index (CPI) at 1.2% and core at 1.1%, while PPI has risen to a four-year high, suggesting weak consumer demand and margin pressure. The bank highlights that authorities are using targeted easing and tighter capital controls to manage USD flows and limit Yuan strength, keeping the currency as a regional anchor.
Policy tightening around capital flows
"May CPI held at 1.2% YoY, with core easing slightly to 1.1%, while PPI rose to 3.9%, the highest in four years, pointing to subdued consumer demand and continued pressure on margins."
"In contrast, the external picture remains firm, with the trade surplus widening to $105.4bn, supported by strong export growth, especially in AI-related products."
"PBoC governor Pan Gongsheng framed China’s markets as a stable allocation destination and a haven amid rising geopolitical tensions and global volatility, highlighting their depth and liquidity as attractive for diversification."
"On the policy side, authorities are combining targeted easing with tighter control of capital flows, nudging banks to attract USD deposits above SOFR to keep export proceeds offshore and limit yuan strength, alongside stricter cross-border enforcement."
"The yuan still acts as a regional anchor, and Chinese bonds have held up well even as 10y CGB yields have moved about 5bp higher from early-June lows."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- DJIA rose 0.6% on Friday, leading the US majors higher on peace deal optimism and a consumer sentiment beat.
- The US and Iran are publicly disputing the contents of the draft MOU, with no official final text released by either side.
- Rate markets treat next week's Fed hold as a formality and now favor a first hike by December.
The Dow Jones Industrial Average (DJIA) climbed 0.6% on Friday, settling near 51,200 and outperforming the rest of the US majors on a day when the tech-heavy Nasdaq Composite slipped into the red. The bid rests on a peace deal that exists mostly as a social media post: Pakistani Prime Minister Shehbaz Sharif announced a final agreed text, Iranian state media described its own set of terms, and neither principal has confirmed anything.
The Dow clocked in just above 50,800 in the opening hour of a session that traded headlines over fundamentals, then ran to a mid-morning peak close to 51,300. A midday flush followed after US President Donald Trump took to Truth Social to warn Tehran over its conduct, dragging the benchmark back toward the session low. Upbeat sentiment data at 14:00 GMT and renewed signing chatter hauled it back toward the highs before a late fade into the close.
A final text, depending on who you ask
Sharif's post on X claimed negotiators had locked down the text of the agreement and dismissed contrary reporting as a coordinated misinformation campaign, a striking level of confidence for an unpublished document. Iranian state media filled the vacuum with a version of the memorandum of understanding (MOU) that commits the US to lifting sanctions on Iranian Crude Oil exports while Iran reopens the Strait of Hormuz. Fuller accounts circulating in Tehran add a US troop withdrawal and a reconstruction commitment worth $300 billion or more, neither of which Washington has acknowledged.
The American side is hardly steadier, with Trump flatly denying Tehran's account of the terms on Friday after a fresh drone attack, even while floating a Geneva signing as soon as this weekend. Iran's Foreign Ministry has blamed contradictory US positions for disrupting the process and pushed back on the weekend timeline, and Trump has declared a deal imminent repeatedly across the four-month conflict. West Texas Intermediate (WTI) Crude Oil futures still fell about 3% to trade around $84 a barrel, suggesting energy desks are pricing Hormuz relief first and asking for verification later.
A trillionaire premiere steals the tech bid
The day's other spectacle was SpaceX, which priced its initial public offering (IPO) at $135, opened at $150 on the Nasdaq under SPCX and ran more than 20% higher, minting Elon Musk as the world's first trillionaire. Capital chasing the debut left megacap tech mixed and the Nasdaq Composite down 0.1%, while the Dow's old-economy roster quietly took the lead.
Michigan hands the Fed its talking point
University of Michigan (UoM) consumer sentiment printed 48.9 in the preliminary June read against a consensus of 46, a beat that still leaves absolute levels historically depressed. The detail that matters sat in the inflation components, where 1-year expectations eased to 4.6% from 4.8%, and the 5-year measure fell to 3.4% from 3.9%.
With the Consumer Price Index (CPI) still running at 4.2% YoY, cooling expectations hand the Federal Reserve (Fed) cover for next Wednesday's hold at 3.50% to 3.75%, which CME FedWatch prices above 96%. The live question is when the next move lands, and rate markets point up rather than down: hike odds run near 30% by September, close to 40% in October, and tip toward 60% by the December meeting, where a single step to 3.75% to 4.00% screens as the most likely outcome.
One preliminary survey does not unwind a 4-handle CPI, but equities traded Friday as though it might. Wednesday's refreshed rate projections will show whether the Fed is prepared to validate that pricing or lean against it.
Levels and bias
Resistance: The 51,300 area capped the index twice, first at the mid-morning high and again on the afternoon recovery. Acceptance above that zone would mark the peace trade graduating from rumor to conviction, a hard case to make before a signature actually exists.
Support: Initial demand sits at the 51,000 mark, though the zone that matters runs from roughly 50,800 to 50,850, defended once in the opening hour and again during the midday flush. A weekend without a signature puts that floor straight back in play.
Bias: Constructive while the index holds above 51,000, with momentum reset after the late pullback and the Stochastic Relative Strength Index (Stoch RSI) finishing just below 30 on the 5-minute chart. Monday's open belongs to whatever happens, or fails to happen, in Geneva; gap risk cuts both ways and sizing should respect it.
Dow Jones 5-minute chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- USD/JPY trades near 160.20 as the JPY remains slightly pressured ahead of next week’s BoJ policy decision.
- Rising expectations of a BoJ rate hike may not be enough to support the Yen if officials avoid talk of further tightening.
- The Fed meeting will also be in focus as Kevin Warsh chairs his first FOMC.
The USD/JPY pair trades near the 160.20 region on Friday as the Japanese Yen (JPY) remains slightly under pressure, while investors prepare for a key central bank week featuring the Bank of Japan's (BoJ) policy decision and Kevin Warsh’s first Federal Reserve (Fed) meeting as Chair.
The Yen continues to struggle despite rising expectations that the BoJ could raise interest rates next week. However, the move may not be enough to provide sustained support for the Yen if the BoJ avoids providing strong guidance on further tightening.
The upcoming FOMC meeting will be closely watched as newly appointed Fed Chair Kevin Warsh takes the reins, with traders focusing on the statement, projections, and press conference for signs of whether the Fed could maintain a hawkish stance later this year.
Short-term technical analysis:
On the 4-hour chart, USD/JPY trades at 160.21. The pair is holding above the 100-period Simple Moving Average (SMA) at 159.72, but it remains capped just under the 20-period SMA near 160.35, keeping the near-term tone broadly neutral with a slight topside constraint. The Relative Strength Index (RSI) around 49 underscores this consolidative stance, suggesting waning upside momentum after the recent pullback.
On the topside, initial resistance is aligned at 160.34, with the 20-period SMA at 160.35 and a higher horizontal barrier at 160.38 forming a tight supply zone that bulls must clear to reopen a stronger advance. On the downside, immediate support emerges at 160.17, ahead of a firmer floor at 159.96, while the 100-period SMA at 159.72 is positioned as a deeper dynamic support level in case selling pressure extends.
(The technical analysis of this story was written with the help of an AI tool.)
- Gold consolidates after Thursday's rebound but remains on track for a second straight week of losses.
- Traders await fresh updates on US-Iran negotiations after Trump said an agreement could be signed soon.
- Technically, XAU/USD remains bearish, with the RSI near 35 indicating subdued upside momentum.
Gold (XAU/USD) consolidates on Friday as traders await further developments on a potential US-Iran peace deal. At the time of writing, XAU/USD is trading around $4,200 after climbing to an intraday high of $4,246 earlier in the day.
US President Donald Trump said on Thursday that he had canceled planned military strikes on Iran and claimed a peace agreement could be signed as soon as this weekend.
Trump's statement lifted market sentiment, helping Gold rebound from a nearly seven-month low of $4,023, as the US Dollar (USD) and Oil prices lost ground.
Iranian Foreign Minister Abbas Araghchi said the Memorandum of Understanding (MoU) with the United States has “never been closer” while urging media not to speculate about its contents.
Bullion is struggling to extend the previous day's gains as Tehran has yet to announce a final decision. The upside also appears limited after this week's US inflation data reinforced expectations that the Federal Reserve (Fed) may need to keep interest rates higher for longer. Higher borrowing costs tend to weigh on non-yielding assets such as Gold.
The Consumer Price Index (CPI) climbed to 4.2% YoY in May from 3.8% YoY in April, marking its highest level since April 2023. The Producer Price Index (PPI) rose 6.5% YoY from 5.7%, its strongest pace since November 2022.
Hawkish Fed expectations and lingering doubts over whether a US-Iran agreement is imminent also help limit losses in the Greenback, leaving the precious metal on track for a second straight weekly loss.
The US Dollar Index (DXY), which measures the Greenback's value against a basket of six major currencies, trades around 99.78, holding modest intraday gains.
On the data front, the preliminary University of Michigan Consumer Sentiment Index improved to 48.9 in June from 44.8 in May, exceeding market expectations of 46. Meanwhile, one-year and five-year inflation expectations eased to 4.6% and 3.4%, respectively, from 4.8% and 3.9%.
Technical analysis: Bears stay in control as RSI signals weak momentum
XAU/USD remains in a bearish near-term bias as price holds below the 20-day Simple Moving Average (SMA) from the Bollinger Bands at roughly $4,425, leaving the recent bounce looking corrective within a broader downswing.
Momentum is weak on the daily chart. The Relative Strength Index (RSI) sits around 35, showing subdued upside momentum, while an elevated Average Directional Index (ADX) near 35 suggests the prevailing downtrend remains technically strong even as volatility compresses within the Bollinger envelope.
On the downside, initial support emerges near the lower Bollinger Band around $4,149, ahead of more substantial horizontal demand at $4,000, where buyers would be expected to defend a deeper pullback.
On the topside, a recovery would first face resistance at the Bollinger mid-line / 20-day SMA near $4,425, with a further barrier at the upper Bollinger Band near $4,701, which together define the key zone that bulls would need to reclaim to ease the current bearish tone.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- Silver edges higher amid hopes for a US-Iran agreement that is reducing safe-haven demand.
- The US Dollar remains under pressure following comments from US officials and stronger-than-expected consumer sentiment data.
- Negotiations on the nuclear issue are set to continue after the potential signing of a memorandum of understanding this weekend.
Silver (XAG/USD) trades around $67.50 on Friday at the time of writing, up 0.21% on the day. The white metal maintains a positive bias despite improving market sentiment driven by diplomatic progress between the United States (US) and Iran.
Investors remain focused on discussions between Washington and Tehran after Iran’s IRNA news agency released the main terms of the memorandum of understanding currently under negotiation. According to the reported terms, no agreement has been reached at this stage regarding the nuclear file, while negotiations on the issue are set to continue within a 60-day period after signing. The text also includes no Iranian commitment regarding the transfer of management of the Strait of Hormuz.
Optimism surrounding the potential signing of the memorandum as early as Sunday in Geneva is helping ease geopolitical concerns that had supported safe-haven flows in recent weeks. However, the absence of a definitive agreement on nuclear matters is keeping a degree of caution in financial markets.
Meanwhile, the US Dollar remains under pressure. US Vice President JD Vance stated that Iran would not receive any cash or released funds simply in exchange for signing an agreement, while also pushing back against what he described as false information surrounding the negotiations. These remarks accompanied a decline in the US Dollar (USD), with the US Dollar Index (DXY) falling toward the 99.75 area.
Market participants also digested an improvement in US consumer confidence. The preliminary University of Michigan Consumer Sentiment Index rose to 48.9 in June from 44.8 in May, beating market expectations of 46. At the same time, one-year inflation expectations eased to 4.6% from 4.8%, while five-year inflation expectations declined to 3.4% from 3.9%.
The weakness of the Greenback continues to support Dollar-denominated precious metals, including Silver, partly offsetting the negative impact of easing geopolitical tensions. Investors are now watching for further developments in US-Iran negotiations, which could influence both risk appetite and demand for safe-haven assets.
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.
A Reuters poll released on Friday found that the Bank of England (BoE) is projected to keep the Bank Rate at 3.75% at the June 18 meeting, based on a survey of 65 economists.
Regarding the future of interest rates, 40% of the polled expect at least one interest rate increase toward the end of the year, while six are eyeing a rate cut.
The survey showed that economists expect inflation to peak at 3.6% this year, approaching double the BoE’s 2% target, before falling to 2.6% in 2027. The economy is expected to grow 1% this year—up from May’s poll of 0.8%—and 1.1% in the next year.
Bank of England implied rates forward curve
BoE FAQs
The Bank of England (BoE) decides monetary policy for the United Kingdom. Its primary goal is to achieve ‘price stability’, or a steady inflation rate of 2%. Its tool for achieving this is via the adjustment of base lending rates. The BoE sets the rate at which it lends to commercial banks and banks lend to each other, determining the level of interest rates in the economy overall. This also impacts the value of the Pound Sterling (GBP).
When inflation is above the Bank of England’s target it responds by raising interest rates, making it more expensive for people and businesses to access credit. This is positive for the Pound Sterling because higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls below target, it is a sign economic growth is slowing, and the BoE will consider lowering interest rates to cheapen credit in the hope businesses will borrow to invest in growth-generating projects – a negative for the Pound Sterling.
In extreme situations, the Bank of England can enact a policy called Quantitative Easing (QE). QE is the process by which the BoE substantially increases the flow of credit in a stuck financial system. QE is a last resort policy when lowering interest rates will not achieve the necessary result. The process of QE involves the BoE printing money to buy assets – usually government or AAA-rated corporate bonds – from banks and other financial institutions. QE usually results in a weaker Pound Sterling.
Quantitative tightening (QT) is the reverse of QE, enacted when the economy is strengthening and inflation starts rising. Whilst in QE the Bank of England (BoE) purchases government and corporate bonds from financial institutions to encourage them to lend; in QT, the BoE stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive for the Pound Sterling.
- UK economy contracts in April, pressuring the Pound ahead of the BoE decision.
- US-Iran signing readiness drags WTI lower, easing inflation fears.
- Michigan sentiment improves as one-year inflation expectations edge lower.
The Pound Sterling (GBP) turns negative against the US Dollar (USD) on Friday after UK data showed the economy contracted in April, while rising prospects of an agreement between the US and Iran improved risk appetite. Yet, the Greenback erased its earlier losses and traded above its opening price. At the time of writing, the GBP/USD pair trades at 1.3413, virtually unchanged.
Risk on mood as Washington and Tehran are set to sign
Sentiment improved after newswires reported that Washington and Tehran are closing in on a deal, which, according to Western media, could be signed in Geneva, Switzerland, between June 15-17. Iranian officials denied those claims, as reported by Tehran-linked media, and the Iranian Foreign Minister said that the Islamabad Memorandum of Understanding (MOU) has never been closer and is pending finalization, and that the media should refrain from speculating about its content.
Breaking news reported by Al Arabiya said that the US and Iran informed mediators of their readiness to sign, citing diplomatic sources. Consequently, Oil prices have fallen, with West Texas Intermediate (WTI) trading down over 2.20% to $84.47 per barrel.
Fed rate cut odds toward the end of 2026, trimmed from 88% to 68%
The news had eased inflationary pressures. Money markets are expecting 16 basis points (bps) of rate hikes by the US Federal Reserve towards the end of the year, down from 22 bps a day ago, according to Prime Terminal data.
The US Dollar Index (DXY), which tracks the buck’s value against a basket of currencies, holds steady at 99.68, a headwind for GBP/USD.
The US Consumer Sentiment, as reported by the University of Michigan (UoM), rose from 44.8 to 48.9 in June’s preliminary reading, while inflation expectations for one year eased from 4.8% to 4.6%.
In the UK, Gross Domestic Product (GDP) contracted by 0.1% in April, after a 0.3% growth in March. Next week, the UK economic calendar will feature inflation and employment figures ahead of the Bank of England's rate decision, which is expected to keep rates unchanged.
In the US, the data schedule will feature the Fed’s monetary policy decision and Retail Sales.
GBP/USD Price Forecast: Technical outlook
In the daily chart, GBP/USD trades at 1.3411, keeping a mildly bearish near-term tone as spot holds beneath a cluster of key trend and average-based barriers. Price now sits under the upward support trend line’s break point at 1.3415 and below the latest reading of the simple moving average cluster around 1.3468, suggesting rallies are being capped rather than sustained. The downward resistance trend line, with a break price near 1.3562, continues to frame the broader corrective phase, while the Relative Strength Index (14) hovering just below the 50 mark hints at fading bullish momentum rather than outright oversold conditions.
On the topside, initial resistance is seen at the reclaimed uptrend break area around 1.3415, where sellers are likely to defend the former support. Above that, the grouped 50-, 100- and 200-period simple moving averages around 1.3468 form a more substantial cap, ahead of the downtrend break level at 1.3562, which guards a deeper recovery. On the downside, the absence of clearly defined indicator-based floors below spot leaves sterling vulnerable to further slippage, with traders likely to look to recent swing lows on the chart as the next potential demand zones should 1.3411 give way on a daily close.
(The technical analysis of this story was written with the help of an AI tool.)
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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