The US Dollar extended the tepid employment data-inspired slump.
The United States will publish fresh inflation data in the upcoming days.
XAU/USD trades near fresh all-time highs with the bullish bias intact.
Gold prices reached fresh record highs on Monday, with the bright metal extending its rally beyond the $3,630 mark. It currently trades not far below an intraday peak of $3,646.41, as investors keep dropping the US Dollar (USD). The Greenback’s selling spiral was triggered by a tepid Nonfarm Payrolls (NFP), which showed the country added a modest 22K new jobs in August. The country added 79K in July, and lost 12K in June, making it a third consecutive discouraging report.
Tepid job creation pretty much confirmed the Federal Reserve (Fed) will cut interest rates when it meets next week, with market participants even increasing bets for a larger interest rate cut of 50 basis points (bps).
During the upcoming days, the United States (US) will publish inflation-related figures. The July Producer Price Index (PPI) will be out on Wednesday, while the August Consumer Price Index (CPI) will be out on Thursday. The latter is foreseen at 2.9% YoY, higher than the 2.7% posted in July. The core annual reading is expected to remain steady at 3.1%. Also on Thursday, the European Central Bank (ECB) is scheduled to announce its decision on monetary policy. The ECB is widely anticipated to keep interest rates on hold this time.
XAU/USD short-term technical outlook
From a technical point of view, the daily chart for XAU/USD shows that bulls are in full control despite overbought conditions. Technical indicators head firmly north at extreme levels, without signs of changing course anytime soon. At the same time, the pair is developing above all its moving averages, with the 20 Simple Moving Average (SMA) gaining upward traction above the 100 and 200 SMAs.
The near-term picture also skews the risk to the upside. The 4-hour chart shows that technical indicators keep heading higher within overbought readings, partially losing their upward strength but still aiming north. At the same time, a bullish 20 SMA stands at around $3,571, which is well above the longer ones, reflecting the latest run to record highs. Corrective declines should now find buyers around $3,600 for the bullish trend to remain alive.
The Pound to US Dollar (GBP/USD) exchange rate edged higher at the start of the week, as the fallout from Friday’s weak US payrolls report continued to weigh on the Greenback.
At the time of writing, GBP/USD was trading at around $1.3522, up around 0.2% from Monday’s opening level.
The US Dollar (USD) remained under pressure on Monday as investors continued to absorb Friday’s disappointing non-farm payroll release.
The Bureau of Labor Statistics revealed just 22,000 jobs were added in August, compared to forecasts of 73,000. Adding to the gloom, June’s figure was revised lower to show a loss of 13,000 jobs.
The data has reinforced fears that the US labour market is rapidly losing momentum and fuelled speculation that the Federal Reserve will have to accelerate its easing cycle.
Markets are now pricing in rate cuts totalling at least 75 basis points, while odds of a 50bps move this month have climbed to around 10%.
Sterling was largely stable at the start of the week, with investors showing little reaction to Prime Minister Keir Starmer’s cabinet reshuffle following the departure of Deputy Prime Minister Angela Rayner.
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Concerns over fiscal stability were eased somewhat by the decision to retain Rachel Reeves as Chancellor, which may also have helped limit volatility in the bond market after last week’s turbulence.
Meanwhile, lingering expectations that the Bank of England (BoE) will maintain a cautious stance on interest rate cuts helped underpin the Pound.
GBP/USD Forecast: Payroll Revisions to Drive Fresh Dollar Losses?
Looking forward, the release of the annual revision to non-farm payrolls on Tuesday could put the US Dollar back under heavy pressure.
Early estimates suggest payrolls for 2025 may be revised down by as much as 800,000, which would deal another blow to confidence in the strength of the US jobs market. Such a result could prompt traders to ramp up bets on a larger Fed rate cut this month.
That said, the Dollar may find some support as investors turn their attention towards this week’s US inflation report.
With no significant UK data scheduled over the next couple of days, Sterling’s movements are likely to remain largely dictated by global sentiment and shifts in Dollar demand.
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GBP/USD Forecast: Pound Sterling clings to bullish stance to start week
GBP/USD stays in a consolidation phase above 1.3500 after rising more than 0.5% on Friday. The pair remains technically bullish in the short term.
Growing expectations for multiple Federal Reserve (Fed) rate cuts following the disappointing August labor market data weighed heavily on the US Dollar (USD) heading into the weekend. Read more…
GBP/USD Weekly Forecast: Focus remains on stagflation and the BoE
In quite turbulent past few days for the Pound Sterling, GBP/USD eventually managed to close the week with decent gains above the key 1.3500 figure, reversing at the same time two weekly retracements in a row.
While the cautious stance from the Bank of England (BoE) continues to lend some cushion to the currency, speculation that a potential stagflationary scenario could be brewing raised extra concerns among market participants and seems to keep occasional bullish attempts contained. Read more…
Gold consolidates Friday’s record rally to $3,600 early Monday amid risk-off flows.
US Dollar recovers from the Nonfarm Payrolls-led blow; Fed rate cut bets could limit its upswing.
Heavily overbought RSI on the daily chart indicates buyers’ exhaustion as focus shifts to US CPI inflation this week.
Gold is hanging close to the all-time high of $3,600 in Asian trading on Monday, in the aftermath of awful US labor data for August released on Friday.
Gold pauses its record run ahead of US inflation test
Despite the latest pullback from record highs, Gold buyers retain control amid sustained dovish expectations surrounding the US Federal Reserve (Fed), lingering Russia-Ukraine geopolitical tensions, and additional Gold buying by China’s central bank last month.
The August US jobs report underscored the fourth consecutive month of weak hiring, cementing a 25 basis points (bps) Fed interest rate cut later this month.
The Bureau of Labor Statistics (BLS) showed Friday that the headline US Nonfarm Payrolls (NFP) increased by 22,000, far below forecasts of 75,000, while the Unemployment Rate climbed to 4.3%, the highest level since late 2021.
Additionally, Russia carried out its biggest air strike of the war on Ukraine over the weekend. In response, Ukrainian President Volodymyr Zelensky said the barrage of drones and missiles left four people dead and caused widespread damage across the north, south and east of the country, per Reuters.
Furthermore, the official data showed on Sunday that the People’s Bank of China (PBoC) added Gold to its reserves in August, extending purchases of bullion into a 10th straight month.
However, Gold buyers turn cautious amid renewed US Dollar upswing, led by a steep surge in the USD/JPY pair after the Japanese Yen (JPY) tumbled on the domestic political instability.
Japanese Prime Minister Shigeru Ishiba stepped down from his position on Sunday, following a string of election defeats that stripped his Liberal Democratic Party (LDP) of its majority in both houses of Parliament.
A slowdown in Chinese imports in August raised concerns over the dragon nation’s economic prospects, threatening the Gold price upside. China is the world’s top yellow metal consumer.
Looking ahead, traders could resort to liquidating their Gold long trades, repositioning before the critical US Consumer Price Index (CPI) and Producer Price Index (PPI) inflation data due later in the week.
The inflation data will help confirm whether the Fed will deliver a jumbo rate cut this month.
Gold price technical analysis: Daily chart
Technically, Gold could see a brief corrective decline as the 14-day Relative Strength Index (RSI) remains in a heavily overbought zone. The leading indicator is currently near 76.
Any pullback in Gold could challenge the initial support at the $3,550 psychological level, below which the September 4 low of $3,511 will be tested.
A sustained break below the latter will open up a fresh downside toward this month’s low of 3,437.
However, the Bull Cross of the 21-day Simple Moving Average (SMA) and the 50-day SMA could keep bargain hunting alive.
If buyers regain poise, the next topside barrier is seen at the $3,600 psychological mark/ record high. Further north, all eyes will be on the $3,650 figure.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it.
Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
The EUR/USD forecast indicates continued weakness in the dollar after poor US jobs data.
Market focus is now shifting to the US CPI report that will continue shaping the outlook for rate cuts.
The European Central Bank will meet on Thursday.
The EUR/USD forecast indicates continued weakness in the dollar after a downbeat monthly employment report on Friday. Meanwhile, market participants are slowly shifting their focus to the ECB policy meeting, where policymakers could keep interest rates unchanged.
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Data on Friday revealed that the US economy added a dismal 22,000 jobs in August. Meanwhile, economists had expected an additional 75,000 jobs. At the same time, the unemployment rate increased from 4.2% to 4.3% as expected. The poor figures solidified bets for a September rate cut and increased the likelihood of a more dovish Fed in the future.
Market focus is now shifting to the US CPI report that will continue shaping the outlook for rate cuts. Soft figures will support the current outlook. On the other hand, hot figures could renew worries about the impact of tariffs on price pressures.
Meanwhile, the European Central Bank will meet on Thursday. Traders expect policymakers to keep rates unchanged. This will contrast sharply with the Fed, which will likely be more dovish this month. The divergence in policy and economic outlooks between the US and the Eurozone could send the euro higher in the coming months.
EUR/USD key events today
Market participants do not expect any key economic releases today. Therefore, the pair might extend the previous session’s move.
EUR/USD technical forecast: Bulls puncture the range resistance
EUR/USD 4-hour chart
On the technical side, the EUR/USD price is attempting to break out of its long-term range. Bulls are challenging the range resistance at the 1.1720 level. At the same time, the price trades above the 30-SMA, with the RSI near the overbought region, suggesting bulls are in the lead.
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EUR/USD has remained in consolidation for a long time, with the price moving sideways and chopping through the 30-SMA. However, before, the range, bulls were in the lead. Therefore, there is a high chance they will break out of this range to continue rallying.
A break above the range resistance would allow the price to retest the 1.1801 resistance level. On the other hand, if bulls fail to break above this level, the price will likely remain in consolidation.
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The (Brent) price soars high in its last intraday trading, taking advantage of forming a positive divergence on the (RSI), with the emergence of the positive signals from there, and the price gad previously benefited from the stability of the key support at $65.00, gaining positive momentum that intensified these signals, in attempt to recover some of the previous losses on the short-term basis, with the continuation of the negative pressure that comes from its trading below EMA50, decreasing the chances for the recovery.
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The pair’s near-term technical outlook suggests that the bullish bias remains intact.
The US Dollar (USD) could struggle to attract buyers after August jobs data.
GBP/USD stays in a consolidation phase above 1.3500 after rising more than 0.5% on Friday. The pair remains technically bullish in the short term.
Pound Sterling Price Last 7 Days
The table below shows the percentage change of British Pound (GBP) against listed major currencies last 7 days. British Pound was the strongest against the Canadian Dollar.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
-0.26%
-0.09%
0.50%
0.61%
-0.54%
-0.55%
-0.44%
EUR
0.26%
0.17%
0.69%
0.88%
-0.28%
-0.29%
-0.18%
GBP
0.09%
-0.17%
0.40%
0.71%
-0.45%
-0.45%
-0.29%
JPY
-0.50%
-0.69%
-0.40%
0.18%
-1.02%
-1.01%
-0.90%
CAD
-0.61%
-0.88%
-0.71%
-0.18%
-1.13%
-1.15%
-0.99%
AUD
0.54%
0.28%
0.45%
1.02%
1.13%
-0.01%
0.15%
NZD
0.55%
0.29%
0.45%
1.01%
1.15%
0.00%
0.16%
CHF
0.44%
0.18%
0.29%
0.90%
0.99%
-0.15%
-0.16%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Growing expectations for multiple Federal Reserve (Fed) rate cuts following the disappointing August labor market data weighed heavily on the US Dollar (USD) heading into the weekend.
The Bureau of Labor Statistics reported that Nonfarm Payrolls (NFP) rose by only 22,000 in August. This reading missed the market expectation for an increase of 75,000 by a wide margin. In this period, the Unemployment Rate edged higher to 4.3% from 4.2% in July, as anticipated. On another concerning note, the BLS’ press release showed that June’s NFP increase was revised down by -27,000, from 14,000 to -13,000.
According to the CME FedWatch Tool, markets are currently pricing in about a 75% probability that the Fed will lower the policy rate by a total of 75 basis-points (bps) this year, up from about 40% early last week.
The US economic calendar will not feature any high-impact data releases on Monday. Hence, investors could react to changes in risk perception.
In the European session, US stock index futures gain between 0.2% and 0.35%. A bullish opening in Wall Street could put additional weight on the USD’s shoulders and allow GBP/USD to continue to stretch higher in the second half of the day.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays near 60 and GBP/USD continues to trade above the 20-day, 50-day and 100-day Simple Moving Averages (SMAs), suggesting that the bullish bias remains intact.
On the upside, 1.3540 (Fibonacci 61.8% retracement of the latest downtrend) aligns as the next resistance level before 1.3600 (static level, round level) and 1.3640 (Fibonacci 78.6% retracement). Looking south, support levels could be spotted at 1.3470-1.3460 (50-day MA, 100-day SMA), 1.3440 (200-period SMA) and 1.3390-1.3400 (Fibonacci 38.2% retracement, round level).
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.
The (Brent) price soars high in its last intraday trading, taking advantage of forming a positive divergence on the (RSI), with the emergence of the positive signals from there, and the price gad previously benefited from the stability of the key support at $65.00, gaining positive momentum that intensified these signals, in attempt to recover some of the previous losses on the short-term basis, with the continuation of the negative pressure that comes from its trading below EMA50, decreasing the chances for the recovery.
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The US Dollar struggles to find demand following the disappointing employment report.
French Prime Minister François Bayrou is widely expected to lose the confidence vote.
EUR/USD closed the previous week marginally higher, thanks to a late rally on Friday. The pair holds its ground and trades comfortably above 1.1700 in the European session on Monday.
Euro Price Last 7 Days
The table below shows the percentage change of Euro (EUR) against listed major currencies last 7 days. Euro was the strongest against the Canadian Dollar.
USD
EUR
GBP
JPY
CAD
AUD
NZD
CHF
USD
-0.31%
-0.16%
0.41%
0.59%
-0.60%
-0.61%
-0.45%
EUR
0.31%
0.15%
0.64%
0.91%
-0.29%
-0.31%
-0.13%
GBP
0.16%
-0.15%
0.38%
0.76%
-0.44%
-0.45%
-0.24%
JPY
-0.41%
-0.64%
-0.38%
0.26%
-0.99%
-0.97%
-0.81%
CAD
-0.59%
-0.91%
-0.76%
-0.26%
-1.18%
-1.20%
-0.99%
AUD
0.60%
0.29%
0.44%
0.99%
1.18%
-0.01%
0.21%
NZD
0.61%
0.31%
0.45%
0.97%
1.20%
0.01%
0.21%
CHF
0.45%
0.13%
0.24%
0.81%
0.99%
-0.21%
-0.21%
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
The US Dollar (USD) came under heavy selling pressure in the American session on Friday after the Bureau of Labor Statistics announced that Nonfarm Payrolls (NFP) rose by only 22,000 in August. This reading missed the market expectation for an increase of 75,000 by a wide margin. Additionally, June’s NFP increase got revised down by -27,000, from 14,000 to -13,000. With this data reminding markets of worsening conditions in the US labor market, the USD weakened against its rivals.
According to the CME FedWatch Tool, the probability of the Federal Reserve (Fed) cutting the policy rate in September and October rose above 70% from below-50% ahead of the release of the employment report.
Later in the day, markets will be paying close attention to the outcome of the confidence vote in French Prime Minister Francois Bayrou, who called the vote himself after failing to pass the budget for 2026 that would require austerity measures, worth about €44 billion.
Bayrou is widely expected to lose the vote and such a result shouldn’t be surprising. However, it’s unclear whether President Emmanuel Macron will call a snap election. “After the fall of a conservative and a centrist as prime minister, most observers expect Macron to next look for a candidate from the ranks of the centre-left Socialists (PS),” Reuters said reporting on the issue.
In case Macron calls for a snap election, the Euro could come under selling pressure with the initial reaction. Even if Macron appoints a new Prime Minister, the Euro could still have a hard time gathering strength unless markets see a clear fiscal path forward.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly above 60 and EUR/USD continues to trade well above the 20-period, 50-period, 100-period and 200-period Simple Moving Averages, reflecting a bullish stance in the short term.
On the upside, 1.1760 (static level) aligns as the first resistance level before 1.1800 (static level, round level) and 1.1830 (July 1 high). Looking south, support levels could be spotted at 1.1700 (static level, round level), 1.1670 (20-day SMA, 50-day SMA, 100-period SMA) and 1.1640 (200-period SMA).
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.
A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro 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 then its currency will gain in value 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.
