– Written by


David Woodsmith

STORY LINK Pound-to-Dollar Forecast: Weaker US Inflation Cuts Fed Rate Hike Bets

The Pound to Dollar exchange rate (GBP/USD) climbed back above 1.3400 after softer-than-expected US inflation data prompted investors to scale back expectations of further Federal Reserve rate hikes.

Although geopolitical tensions in the Middle East continue to underpin the Dollar, the benign inflation report triggered a sharp fall in US Treasury yields and allowed Sterling to recover from earlier losses.

GBP/USD Forecasts: Back Above 1.34

The Pound to Dollar (GBP/USD) exchange rate again found support just below 1.3350 in Asian trading on Tuesday and rallied to 1.3430 after lower than expected US data with a dollar reversal as markets focussed primarily on global developments.

UoB commented on the GBP/USD outlook; “downward momentum has not increased significantly. Based on the prevailing momentum, a clear break below 1.3320 appears unlikely.”

According to Scotiabank; “We note the cluster of resistance levels between current spot and 1.3500 but anticipate an extension of the recovery to 1.36.”

Middle East events and the outlook for US interest rates are likely to dominate in the near term. The near-term impacts have pulled the dollar in opposite directions.

There have been further attacks on Iran by the US military while Iran has attacked ships in the Strait of Hormuz. In response, energy prices have moved higher again while risk conditions remain more fragile.

MUFG commented; “Tit-for-tat military strikes between the US and Iran have continued adding to concerns over the risk of more sustained disruption for energy supplies through the Strait of Hormuz.”

ING commented; “Short-term momentum is swinging back in favour of the dollar as the FX market is finally starting to take the Gulf re-escalation more seriously. Still, both oil (Brent is at $84/bl this morning) and the USD are showing reluctance to fully price back in another supply shock. That’s despite the US reimposing a blockade in the Strait of Hormuz and oil inventories at worryingly low levels.”

Overnight, the US 10-year yield jumped to above 4.60%, not far below 18-month highs recorded in May.

There was, however, a notable reversal after the US data with a retreat to near 4.55% for the 10-year bond and lower yields pushed the dollar lower.

US consumer prices declined 0.4% for June with the year-on-year inflation rate dipping to 3.5% from 4.2% and well below consensus forecasts of 3.8%.

Core prices were unchanged on the month with the annual rate retreating to 2.6% from 2.9% and below expectations of 2.8%.

The dollar dipped after the data with less confidence that the Federal Reserve would hike rates twice before year-end. Markets also cut the probability of a July rate hike to below 20% from 40% the previous day.

According to ING; “Our call for the remainder of the year remains USD negative, primarily resting on another de-escalation and dovish Fed view. But risks, especially in the near-term, are clearly shifting to the bullish side for the greenback.”

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TAGS: Pound Dollar Forecasts

Copper price ended yesterday’s trading by forming bullish waves, to settle near the initial barrier at $6.3000 level, affected by the positivity of the main indicators, specifically by stochastic reach to 80 level as appears in the above image.

The suggested scenario depends on the upcoming four hours’ close, the stability below the barrier will reinforce the chances of forming bearish corrective trading, to target $6.1200 reaching $5.9500, while breaching the barrier and holding above it will provide a chance for recording some extra gains by its rally towards $6.4800.

The expected trading range for today is between $6.1200 and $6.3800

Trend forecast: Bearish

GBP/USD gained ground, supported by U.S. CPI report. Traders bet that Fed will be less hawkish as inflation has started to calm down. Traders also focus on comments from Fed Chair Warsh. He said that CPI decline did not mean that Fed accomplished its mission.

In case GBP/USD pulls back below the 50 MA at 1.3376, it will head towards the nearest support level at 1.3335 – 1.3350. A successful test of of this level will open the way to the test of the next support at 1.3250 – 1.3265.

On the upside, GBP/USD needs to settle above the resistance at 1.3450 – 1.3465 to have a chance to gain additional upside momentum in the near term.

– Written by


David Woodsmith

STORY LINK GBP/USD Price Forecast: Pound Sterling Surges vs Dollar after US Inflation Miss

The Pound to US Dollar (GBP/USD) exchange rate advanced strongly on Tuesday after softer US inflation figures prompted investors to scale back expectations for further Federal Reserve interest rate hikes.

At the time of writing, GBP/USD was trading around $1.3416, up approximately 0.5% from the opening levels of Tuesday’s session.

The US Dollar (USD) came under broad selling pressure on Tuesday following the publication of the latest US consumer price index, which indicated price pressures eased by more than markets had anticipated in June.

Headline inflation slowed from 4.2% to 3.5% year-on-year, beating expectations for a more modest decline to 3.8%. Core inflation also surprised to the downside, with the annual rate easing to 2.6%.

The weaker inflation print prompted investors to reassess the outlook for US monetary policy, with market pricing for a September Federal Reserve interest rate increase falling from roughly 70% to around 50%.

The Pound (GBP) also attracted buyers on Tuesday as investors continued to anticipate that the Bank of England (BoE) may yet be forced to tighten monetary policy again.

Those expectations have been reinforced by the latest surge in global energy prices. Renewed conflict in the Gulf has resulted in the closure of the Strait of Hormuz, fuelling concerns over higher import costs and the potential for another inflationary shock that could keep pressure on the BoE to raise borrowing costs before the end of 2026.

However, Sterling’s advance was capped by measured remarks from Bank of England Governor Andrew Bailey.

Appearing before the Treasury Select Committee, Bailey warned that escalating tensions in the Middle East present significant risks to financial stability, while also highlighting that weak domestic growth continues to weigh on the UK’s economic outlook.

Near-Term GBP/USD Forecast: US Producer Prices Awaited

Looking to the midweek session, attention will turn to the publication of the latest US producer price index, which is expected to provide the next major catalyst for the Pound to US Dollar (GBP/USD) exchange rate.

If producer price inflation also points to easing price pressures, investors may further unwind expectations for additional Federal Reserve tightening, potentially placing renewed pressure on the US Dollar.

Meanwhile, the Pound may struggle to establish a clear direction on Wednesday as the UK economic calendar remains quiet ahead of Thursday’s closely watched GDP release.

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TAGS: Pound Dollar Forecasts