GBP holding strong against weakened US Dollar
Daily Currency Update
Sterling is maintaining its bullish momentum this morning against the US dollar, the pair surged past the 1.3500 mark on Monday, bolstered by a weakening US dollar amid escalating trade tensions and renewed tariffs announced by President Trump.Positive UK economic data, including a less severe contraction in May's manufacturing PMI and a 3.5% annual rise in house prices, have further supported the pound's ascent. Market expectations now suggest only one additional 25 basis point rate cut by the Bank of England in 2025, indicating a more cautious approach to monetary easing.
The US dollar touched a six-week low, pressured by ongoing trade tensions and signs of economic fragility. The dollar index dipped to 98.58 before rebounding 0.3%, reflecting investor concerns over the U.S. economy amid escalating trade wars and manufacturing contractions.
In Europe, the euro briefly reached a six-week high of $1.1454 before retreating 0.2%, as markets anticipate the European Central Bank's interest rate decision later this week.
Key Movers
Looking ahead, traders are closely monitoring upcoming U.S. economic data, including factory orders' and employment figures, which could further influence currency movements. Traders will be eyeing the final reading of the UK's S&P Manufacturing PMI and comments from BoE policymaker, Catherine Mann, later today for further direction.Additionally, the ECB's rate decision and guidance will be pivotal for the euro's trajectory later this week. As central banks navigate these economic headwinds, heightened volatility across the forex majors is expected this week.
Expected Ranges
- GBP/USD: 1.3480 - 1.3580 ▲
- GBP/EUR: 1.18 - 1.19 ▼
- GBP/AUD: 2.054 - 2.096 ▼
- EUR/USD: 1.1401 - 1.1496 ▲