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British Pound rebounds above 1.3300

  • GBP/USD rebounds to around 1.3325 in Friday’s Asian session. 
  • The US launched the 13th consecutive night of strikes against Iran. 
  • Traders await the UK June Retail Sales report on Friday for fresh impetus. 

The GBP/USD pair recovers some lost ground to near 1.3325, snapping the five-day losing streak during the Asian trading hours on Friday. However, the potential upside might be limited amid heightened military tensions in the Middle East. Traders brace for the release of the UK Retail Sales data, which will be published later on Friday. 

Renewed geopolitical tensions in the Middle East could underpin the US Dollar (USD) as a safe-haven currency. The US Central Command (CENTCOM) said it launched its 13th consecutive night against Iranian targets. US President Donald Trump said on Thursday that the US would hold Iran responsible for the Houthis’ actions and warned Iran and its Houthi allies would both soon receive a “major military punishment,” per the Guardian.

Traders expect the Bank of England (BoE) to keep its benchmark interest rate steady at 3.75% next week as it continues to assess the impact of the Middle East conflict. Financial markets were pricing in one or possibly two quarter-point interest rate hikes by the end of 2026, little changed from Tuesday, according to Reuters. 

The UK Retail Sales data could offer more clues about the UK interest rate path. Retail Sales are expected to show a decline of 0.3% MoM in June, compared to a rise of 1.2% in May. In case of a surprise upside reading, this could reinforce the Bank of England (BoE) to maintain an aggressive tightening stance, supporting the Cable. 

Pound steadies as markets look for BoE to hold Bank Rate at 3.75%

Analysts at Scotiabank note that policy expectations remain firmly anchored ahead of next week’s BoE decision, with “markets … expecting no policy change at the next MPC rate decision, where the Bank Rate is expected to be held at 3.75%.” This steady policy outlook, they suggest, continues to frame near-term trading conditions for the Pound against the US Dollar as investors look toward upcoming UK data for further direction.

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Trade of The Day – GBP/JPY

Facts:

  • The bounced off the lower limit of 1:1 structure at 217.52
  • Main trend on the pair remains upward

Recommendation: Trade: Long GBPJPY at market price Target: 220.16 Stop: 216.92

Opinion: Looking at GBPJPY chart, one can observe that the price reached the key technical support on Tuesday. This support is marked with the lower limit of 1:1 structure (green rectangles), as well as previous price reactions. In addition the price sits above the 100-period moving average from the H4 interval. Should buyers manage to hold the price above the support area 217.52-217.80, another upward impulse may be on the cards. We recommend taking a long position on GBPJPY at market price with two targets: 215.85 and 216.30 We recommend placing a stop loss order at 216.92

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UK CPI set to show receding inflation in June as GBP/USD fails at May highs

  • The UK’s ONR Office publishes the June CPI data on Wednesday.
  • The UK headline CPI is expected to ease toward 2.7% from a year earlier.
  • Core inflation is also seen easing toward 2.5% over the last 12 months.

The UK Office for National Statistics (ONS) will release the June Consumer Price Index (CPI) figures on Wednesday at 06:00 GMT, a print that will matter for markets. Consensus expectations point to inflation pressures still above the Bank of England’s (BoE) target, although losing further momentum.

UK consumer inflation remains one of the most important inputs for the BoE and typically carries real weight for the British Pound (GBP). Following the latest cautious hold by the BoE on June 18, investors now favour a steady hand by the ‘Old Lady’ at its meeting on July 30.

What to expect from the next UK inflation report?

Headline UK CPI is expected to clock 2.7% in the year to June, a tad lower than the May reading. On a monthly basis, inflation is seen gaining 0.1%, adding to the 0.2% increase recorded the previous month.

Core inflation, which strips out the more volatile food and energy components and is therefore more closely watched by the BoE, is forecast at 2.5% on an annual basis, down a tenth of percent from May.

How will the UK CPI data affect GBP/USD?

The BoE met expectations and kept the bank rate unchanged at 3.75% on June 18. However, the 7–2 vote split carried a slightly more hawkish tone, with Megan Greene joining Huw Pill in supporting a 25-basis-point increase. But the larger message is patience, with policy still firmly in wait-and-see mode and market pricing that reflects that stance.

In his latest comments last week, Governor Andrew Bailey said the renewed hostilities in the Gulf highlighted the instability facing the global economy. Turning to the UK, he argued that the country was supported by both its fiscal framework and monetary policy, while stressing that the central challenge remained economic growth.

Bailey added that the UK’s core banking system was resilient and that debt levels were not overstretched. However, he warned that sustainable economic growth would not be possible without financial stability.

Implied rates currently suggest nearly 43 basis points of tightening by year-end, while consensus sees the central bank keeping its policy rate unchanged at its next gathering on July 30.

Back to technicals, Senior Analyst at FXStreet, Pablo Piovano, notes that the recent multi-week recovery in GBP/USD appears to have encountered some initial hurdle in the 1.3550-1.3560 band near the July tops. “In case bulls regain the upper hand, the next barrier emerges at the May top at 1.3653 (May 11), followed by the YTD ceiling at 1.3868 (January 27),” he adds.

On the downside, Piovano sees initial contention at current yearly lows near 1.3140 (June 24). “Further weakness from here could expose a move toward the November 2025 base at 1.3010 (November 5),” Piovano adds.

Piovano also points out that momentum indicators remain somewhat bullish for now as the Relative Strength Index (RSI) hovers just below 54, while the Average Directional Index (ADX) near 18 suggests the current trend lacks muscle.

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British Pound struggles as traders evaluate BoE policy, UK political developments

  • GBP/USD could further depreciate amid differing inflation trends and rate expectations between the BoE and Fed.
  • Markets are monitoring fiscal strategy and cabinet choices under new Prime Minister Andy Burnham.
  • Upcoming UK labor, inflation, and retail data will dictate near-term Sterling volatility and direction.

GBP/USD steadies after three days of losses, trading around 1.3430 during the Asian hours on Tuesday. After recently surging toward two-month highs near 1.3550, the pair has moderated as foreign exchange traders evaluate shifting monetary policies between the Bank of England (BoE) and the US Federal Reserve (Fed) alongside political developments in the United Kingdom (UK).

From a macroeconomic perspective, central bank policy divergence remains the central pillar steering the exchange rate. While market participants anticipate eventual rate adjustments on both sides of the Atlantic, subtle differences in inflation stickiness and labor market strength determine relative yield appeal.

Domestic economic conditions in the UK are facing scrutiny as upcoming labor, inflation, and retail sales data will clarify whether the Bank of England can afford to hold monetary policy restrictive or if easing must accelerate. However, persistently high oil prices kept inflation fears alive, strengthening expectations that the UK central bank will hold interest rates elevated for longer.

As markets gauge the monetary policy trajectory, investors are also processing a leadership shift in Westminster following Andy Burnham’s elevation to Prime Minister. Taking the helm as Britain’s seventh Prime Minister in a decade, and second for Labour since 2024. He reaffirmed fiscal discipline while hinting at relief for taxpayers through a potential raise in the personal allowance. Attention now turns to his Treasury appointment, where reports point to Shabana Mahmood as a frontrunner for chancellor.”

Until clearer economic signals emerge from both central banks and upcoming growth figures, the GBP/USD pair is likely to oscillate, anchored by shifting interest rate expectations and broader global risk appetites.

In the US, economic indicators continue to present a mixed backdrop for the US Dollar (USD). Softening inflation trends have kept Federal Reserve rate cuts on the radar, preventing sharp Greenback rallies and offering baseline support for the British Pound (GBP). However, lingering geopolitical tensions in energy markets and steady global risk sentiment have provided episodic support to the dollar as a safe-haven asset, keeping upside moves in check.

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GBP holds steady near 1.3450 as US-Iran strikes intensify

  • GBP/USD flatlines near 1.3450 in Monday’s early Asian session. 
  • The US launched a new wave of Iran strikes on Sunday, extending its military campaign into a ninth straight night.
  • Andy Burnham becomes UK Labour leader, the last step before taking over as Prime Minister. 

The GBP/USD pair trades on a flat note around 1.3450 during the early Asian session on Monday. Traders continue to assess the developments surrounding US-Iran tensions after the US said that a third American troop was killed in the past two days. The UK employment report will be in the spotlight later on Tuesday. 

The US reported the death of another American service member, who was killed in northern Iraq during the controlled detonation of a downed Iranian drone. US Central Command (CENTCOM) also said on Sunday that it has located unidentified remains in Jordan, where a separate Iranian attack left two US troops dead and one missing in action, per Bloomberg. 

A week of back-and-forth strikes has expanded beyond strictly military targets to include bridges, utilities, and port facilities, raising fears of a prolonged conflict in the Middle East. This, in turn, could weigh on riskier assets, such as the British Pound (GBP), against the US Dollar (USD) in the near term. 

However, signs of softer US consumer and producer inflation have dampened the US Federal Reserve (Fed) rate-hike bets, which might cap the upside for the Greenback. The chance for a Fed rate hike in July stood at 14%, versus a 25% implied odds last week, according to the CME FedWatch tool. Traders are pricing in 30 basis points (bps) of hikes by December.

The probability for a Fed rate hike in July stood at 14%, versus a 25% implied chance last week, according to the CME FedWatch tool. Traders are pricing in 30 basis points (bps) of hikes by December.

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GBP weakens below 1.3500 as US launches new wave of strikes against Iran

  • GBP/USD softens to near 1.3470 in Friday’s Asian session.
  • The US launched a new wave of strikes against Iran for a sixth day in a row.
  • Traders still ramp up their bets on BoE rate hikes this year.

The GBP/USD pair trades on a softer note around 1.3470 during the Asian trading hours on Friday. Geopolitical tensions in the Middle East trigger risk-off market sentiment and weigh on the Cable. The preliminary reading of the Michigan Consumer Sentiment Index for July is due later on Friday.

The United States (US) has carried out major strikes on Iran for the sixth day in a row. Officials in southern Iran’s Bandar Abbas reported that civilian infrastructure, including power facilities and a train station, has been hit.

The US Central Command (CENTCOM) said that the attacks were intended to “further degrade Iranian military capabilities” before saying it had boarded a vessel as part of its blockade of the strait. Earlier this week, US President Donald Trump threatened to strike Iran’s bridges and power plants if the country did not return to talks. Rising tensions in the Middle East could boost a safe-haven currency such as the US Dollar (USD) against the British Pound (GBP). 

Data released on Tuesday showed that US Consumer Price Index (CPI) inflation slowed in June, while data from Wednesday showed a decline in the Producer Price ‌Index (PPI). Traders are now pricing ‌in nearly a 55% chance that the Federal Reserve (Fed) will hike rates in September, according to the CME FedWatch Tool.

On the UK front, Bank of England (BoE) Governor Andrew Bailey said on Tuesday that he was concerned about the resumption of hostilities between the US ‌and Iran in recent days, but so far, there has been no big impact on the UK inflation outlook. Money markets are fully pricing in a BoE hike by the November policy meeting, with a second rate hike priced in by April 2027, according to Reuters.

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Trade of The Day – GBP/AUD

Facts: GBPAUD is trading above the 100-period moving average from D1 interval The pair broke above the resistance at 1.9190 The pair invalidated 1:1 structure

Recommendation: Trade: Long position on GBPAUD at market price Target: 1.9735, 2.0000 Stop: 1.9140

Opinion: GBPAUD has been trading in a downward trend since April 2025, but the pair may be experiencing a trend reversal. Looking at the pair at the D1 interval, one can see that the price broke above the upper limit of the 1:1 structure which, according to the Overbalance strategy, may herald a resumption of an upward trend. As long as the price sits above 1.9190, the further upward move is the base case scenario. We recommend going long GBPAUD at market price with two targets: 1.9735 and 2.0000. We also recommend placing a stop loss at 1.9140. Source: xStation5

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GBPUSD up 0.1% after better-than-expected UK GDP data

08:00 AM, United Kingdom, monthly GDP report:

  • UK GDP Estimate YoY Actual 1.3% (Forecast 1.2%, Previous 1.2%)
  • UK GDP Estimate MoM Actual 0.1% (Forecast 0%, Previous -0.1%)
  • UK Manufacturing Production MoM Actual 0.1% (Forecast -0.2%, Previous 0.4%)

The UK economy continues its steady, post-recession expansion, marking its sixth consecutive month of rolling three-month growth. While the broader trend remains highly positive, momentum slowed slightly heading into the summer, influenced by global supply chain disruptions stemming from the geopolitical conflict in Iran. Figure 1: Contributions to three-month GDP growth, UK, May 2025 to May 2026

Source: Gross domestic product (GDP) monthly estimate from the Office for National Statistics Key Performance & Sector Breakdown

  • Overall GDP: Grew 0.7% in the three months to May 2026 (down slightly from 0.8% in April), but managed a modest 0.1% tick-up in the month of May itself.
  • Services (The Growth Engine) : Grew 0.7% in the three months to May. Growth was powered by Information & Communication (up 2.5%) and professional services—specifically scientific R&D (up 5.1% in May), driven by medical sciences.
  • Production & Manufacturing: Rose 0.1% over the three months. Manufacturing was the standout sub-sector (up 1.6%), led by pharmaceuticals. However, this was weighed down by sharp declines in energy and water utilities.
  • Construction: Grew 1.6% over the three months, buoyed by private commercial projects. However, it contracted 0.8% in May, dragged down by a 5% drop in private housing repair and maintenance.

The pound reacted positively to the reading, though it wasn’t able to break out of the current range between 1,3520 and 1,3550. GBPUSD is tradining closely to the 10-hour exponential moving average (EMA10 on an H1 chart; yellow), slowing down after dynamic gains thruought the yesterday’s session.

Source: xStation5