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GBP/USD Weekly Market Update

GBP/USD is showing signs of losing bullish momentum after repeated failures to sustain gains above the 1.3500 area. A combination of resilient US economic data, expectations that the Federal Reserve will keep interest rates elevated for longer, and renewed geopolitical tensions has strengthened demand for the US Dollar. While political developments in the UK have offered some support to Sterling, they have not been sufficient to offset broader USD strength. Overall, the balance of risks continues to favor further downside in the pair.

Key Drivers

• Strong US consumer sentiment and solid retail sales continue to support the US Dollar and reinforce expectations of a cautious Federal Reserve.

• Repeated rejection around the 1.3500 resistance area suggests buying momentum is fading and increases the risk of a deeper pullback.

• Escalating geopolitical tensions in the Middle East have boosted safe-haven demand for the US Dollar.

• Institutional investors remain cautious on Sterling, with several major market participants viewing recent gains as an opportunity to sell into strength.

Technical Outlook

The broader trend remains vulnerable while GBP/USD trades below 1.3500–1.3510. Initial support is located between 1.3320 and 1.3350. A sustained break below this zone could expose the pair to declines toward 1.3250, while resistance is seen at 1.3510 followed by 1.3555. Momentum indicators remain mixed, with RSI easing from neutral levels and MACD showing weakening bullish momentum.

Risks to the View

A more hawkish Bank of England, easing geopolitical tensions, or weaker-than-expected US economic data could weaken the US Dollar and trigger a recovery in GBP/USD.

Bottom Line

The current macro and technical backdrop favors a cautious bearish outlook. Unless GBP/USD regains and holds above 1.3550, rallies are likely to attract sellers, making a SELL bias appropriate over the coming one to three weeks.

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Gold Weekly Forecast

Bearish Outlook

Gold (XAU/USD) is under pressure, struggling to hold the $4,000 level despite a weaker US Dollar and cooling inflation data.

• Key Driver: Escalating military tensions between the US and Iran are driving up oil prices, which offsets the benefits of a weaker dollar and keeps inflation fears elevated.
• Technical Stance: The outlook remains bearish. Gold is trading below its 20-day SMA, and the RSI (around 40) confirms downward momentum.
• Critical Levels:
  • Support: $3,950–$3,920; if broken, $3,800.
  • Resistance: $4,070–$4,100; if cleared, $4,240.
• What to Watch: Preliminary US PMI data (Friday) is the primary economic release. Markets will also closely monitor Middle East developments, as further conflict could force the Fed to reconsider rate hikes in September.

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DJT May Charge $100,000 for Faster Truth Social Access

Donald Trump’s social media company (DJT)

Discussed charging traders and investors as much as USD 100,000 a month for faster access to the US president’s posts on his Truth Social platform, reports FT

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ECB meeting probably won’t help the euro much.

EUR/USD Weekly Forecast Summary

The EUR/USD pair remains under bearish pressure, trading around 1.1450. The outlook is dominated by geopolitical instability rather than monetary policy.

• Key Drivers:
  • Middle East Conflict: Escalating tensions in the Strait of Hormuz are driving up oil prices and fueling inflationary concerns, overshadowing recent positive US economic data.
  • ECB Outlook: The upcoming European Central Bank meeting is unlikely to boost the Euro, as markets are focused on the war’s impact on the economy.
  • US Data: While US inflation (CPI/PPI) has cooled, reducing immediate Fed rate hike expectations, the geopolitical “red flag” keeps the market cautious.
• Technical Outlook:
  • Trend: Bearish. The pair is trading below key moving averages (100-day and 200-day SMAs).
  • Support: Immediate support is at 1.1414 (20-day SMA); a break below could lead to 1.1324 and 1.1200.
  • Resistance: Initial resistance is at 1.1470, followed by 1.1585.

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Euro remains stronger against Canadian Dollar following Eurozone Trade Balance data

The Euro (EUR) is strengthening against the Canadian Dollar (CAD), trading near 1.6100. Despite a Eurozone trade deficit, hawkish comments from ECB officials have kept rate hike expectations alive, while the Canadian Dollar has weakened due to falling oil prices.

Euro remains stronger against Canadian Dollar following Eurozone Trade Balance data

Market Overview

The EUR/CAD currency pair has extended its gains for the second consecutive day, trading around 1.6100 during European market hours. The Euro continues to show resilience despite a shift in the Eurozone trade balance from a 1.3 billion euro surplus to a 7.8 billion euro deficit in May.

Key Drivers

1. ECB Hawkishness: European Central Bank (ECB) officials, including Marin Kocher and Joachim Nagel, have signaled a readiness to act decisively on monetary policy if necessary. This hawkish stance has offset concerns regarding a contraction in Eurozone industrial production and maintained market expectations for future rate hikes.
2. Canadian Dollar Weakness: The Canadian Dollar, which is sensitive to commodity prices, has faced downward pressure as crude oil prices ease. This decline persists despite ongoing geopolitical tensions in the Middle East, specifically regarding potential supply disruptions in the Strait of Hormuz following recent US-Iran conflicts.

Conclusion
The Euro remains supported by the prospect of higher interest rates, while the Canadian Dollar struggles to find momentum amid fluctuating energy markets. Investors continue to monitor ECB policy signals and global energy supply risks as primary factors influencing the EUR/CAD pair.

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