So, there could be a little bit of a jump here in the next week or so in one direction or the other, really. And the October contract does tend to be a little bit more bullish than September because you start to talk about cooler temperatures in the United States, something that we certainly don’t have at the moment. I’m giving this analysis with all of the windows open, very comfortable temperatures, no need to burn a lot of natural gas, although it is somewhat attached to electricity. It gets a little bit of a spike when it gets really hot; air conditioning demand can drive it higher, but right now there is no real huge push for that either. So, all things being equal, with the abundant supply, it keeps the price of natural gas somewhat suppressed.
Contract Rollover and Seasonal Demand Outlook
Ultimately, I do think that we’re getting close to the end of the quiet season. And this winter could be particularly interesting as the Europeans may find themselves having to import US natural gas, and that will have a major influence here.
But as things stand right now, we’re in a tight range between the 50-day EMA at $2.87 and the $2.65 level underneath. We’re basically in the middle of it. Looks like quiet, choppy trading to me.
The EUR/GBP currency pair is showing signs of a pause in its recent trend, as the Relative Strength Index (RSI) on the daily chart has moved to a neutral reading, suggesting that the pair is likely to consolidate in the near term.
This technical signal indicates that buying and selling momentum are currently balanced, following a period of directional movement. For traders, this often points to a range-bound market where the currency pair may trade sideways until a new catalyst emerges.
What Does a Neutral RSI Signal for EUR/GBP?
A neutral RSI, typically in the 40-60 range, signifies that the market is not overbought or oversold. This lack of directional momentum often precedes a period of consolidation. In the context of EUR/GBP, this means that neither the Euro nor the Pound has a clear technical advantage at the moment.
This technical setup often follows a significant move, allowing the market to ‘breathe’ before the next leg. For investors, a neutral RSI can be a signal to watch for breakouts from established support and resistance levels rather than expecting immediate trend continuation. The current setup suggests that the recent price action is digesting, with neither bulls nor bears in full control.
Key Levels and Market Context
As of this analysis, the pair is trading within a defined range, with traders closely monitoring key technical levels. A break above the recent swing high could signal renewed bullish momentum, while a drop below the current support zone might open the door for further downside. These levels are critical for determining the next significant move.
The consolidation comes amid a complex macroeconomic environment for both the Eurozone and the UK. Divergent monetary policy expectations between the European Central Bank (ECB) and the Bank of England (BoE) remain a core driver for the pair. Any shifts in economic data releases, such as inflation or GDP figures, could quickly alter the technical picture and inject new volatility into the market.
Implications for Traders and Investors
For traders, the current neutral RSI suggests a strategy of range trading or waiting for a clear breakout. The lack of momentum means that chasing price moves could be risky. Instead, focusing on well-defined support and resistance levels offers a more structured approach to navigating this phase.
For longer-term investors, this consolidation phase is a critical period to watch. It reflects the market’s uncertainty about the future path of interest rates in both economies. The resolution of this consolidation will likely set the tone for the pair’s direction in the coming weeks, making it an important development for anyone with exposure to the GBP or EUR.
Conclusion
The neutral RSI reading on the EUR/GBP daily chart indicates a period of consolidation is likely. This technical signal points to balanced momentum, suggesting that the pair may trade within a range until new economic data or policy signals provide a clearer direction. Traders should monitor key support and resistance levels for potential breakout opportunities.
FAQs
Q1: What is the RSI indicator and how is it used in forex trading? The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. It is used to identify overbought or oversold conditions in a market. A reading above 70 typically indicates overbought conditions, while a reading below 30 suggests oversold conditions. A neutral reading, usually between 40 and 60, indicates a lack of strong momentum and often precedes consolidation.
Q2: What does ‘consolidation’ mean for a currency pair like EUR/GBP? Consolidation refers to a period where an asset’s price trades within a relatively narrow range, pausing its broader trend. It occurs when supply and demand are roughly balanced. For a currency pair, this often results in a sideways movement on the chart, as buyers and sellers are equally matched until a new catalyst forces a breakout.
Q3: What factors could break the current EUR/GBP consolidation? Key factors that could break the consolidation include new economic data releases (like inflation or employment figures), shifts in monetary policy expectations from the European Central Bank or the Bank of England, geopolitical events, or significant changes in market risk sentiment. Any of these could provide the momentum needed for a decisive move beyond the current trading range.
At 8 a.m. Eastern Time today, oil was priced at $95.29 per barrel with Brent serving as the benchmark (we’ll explain different benchmarks later in this article). That’s a loss of 11 cents compared with yesterday morning and more than $27 higher than the price one year ago.
Oil price per barrel
% Change
Price of oil yesterday
$95.40
-0.11%
Price of oil 1 month ago
$89.12
+6.92%
Price of oil 1 year ago
$67.80
+40.54%
Price of oil yesterday
Oil price per barrel
$95.40
% Change
-0.11%
Price of oil 1 month ago
Oil price per barrel
$89.12
% Change
+6.92%
Price of oil 1 year ago
Oil price per barrel
$67.80
% Change
+40.54%
Will oil prices go up?
It’s impossible to forecast oil prices with detailed precision. Many different elements affect the market, but ultimately it boils down to supply and demand. When worries about economic recession, war, and other large-scale disruptions increase, oil’s path can shift fast.
How oil prices translate to gas pump prices
Gas prices at the pump don’t only track crude oil. They also include what it takes to refine and move that fuel, the taxes layered on top, and the extra markup your local station adds to stay in business.
Since crude oil generally makes up a majority of the per-gallon cost, changes in its price have an outsized impact. When oil surges, gas prices typically rise in tandem. But when oil retreats, gas prices often lag on the way down, a trend sometimes described as “rockets and feathers.”
The role of the U.S. Strategic Petroleum Reserve
In case of emergency, the U.S. has a store of crude oil known as the Strategic Petroleum Reserve. Its primary purpose is energy security in case of disaster (think sanctions, severe storm damage, even war). But it can also go a long way toward softening crippling price hikes during supply shocks.
It’s not a long-term answer and is more meant to provide temporary relief, assisting consumers and keeping critical parts of the economy running, like key industries, emergency services, public transportation, etc.
How oil and natural gas prices are linked
Both oil and natural gas are key sources of the energy we use every day. Because of this, a big change in oil prices can affect natural gas. For example, if oil prices increase, some industries may swap natural gas for some segments of their operations where possible, which increases demand for natural gas.
Historical performance of oil
To gauge oil’s performance, we often turn to two benchmarks:
Brent crude oil, the main global oil benchmark.
West Texas Intermediate (WTI), the main benchmark of North America
Between these two, Brent better represents global oil performance because it prices much of the world’s traded crude. And, it’s often the best way to track historical oil performance. In fact, even the U.S. Energy Information Administration now uses Brent as its primary reference in its Annual Energy Outlook.
Looking at the Brent benchmark across several decades, oil has been anything but steady. It’s seen spikes due to factors such as wars and supply cuts, and it’s also seen crashes from global recessions and an oversupply (called a “glut”). For example:
The early 1970s brought the first big oil shock when the Middle East cut exports and imposed an embargo on the U.S. and others during the Yom Kippur War.
Prices dropped in the mid-1980s for reasons such as lower demand and more non-OPEC oil producers entering the industry.
Prices spiked again in 2008 with increased global demand, but it soon plummeted alongside the global financial crisis.
During the 2020 COVID lockdown, oil demand collapsed like never before—bringing prices below $20 per barrel.
All to say, oil’s historical performance has been anything but smooth. Again, it’s hugely affected by wars, recessions, OPEC whims, evolving energy initiatives and policies, and much more.
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Frequently asked questions
How is the current price of oil per barrel actually determined?
The current price of oil per barrel depends largely on supply and demand, including news about potential future supply and demand (geopolitics, decisions made by OPEC+, etc.). In the U.S., prices also move based on how friendly an administration is to drilling, as it can affect future supply. For example, 2025 saw the Trump administration move to reopen more than 1.5 million acres in the Coastal Plain of the Arctic National Wildlife Refuge for oil and gas leasing, reversing the Biden administration’s policy of limiting oil drilling in the Arctic.
How often does the price of oil change during the day?
The price of oil updates constantly when the “futures” markets are open. A futures market is effectively an auction where people agree to buy or sell oil in the future. As long as people and companies are trading contracts, the oil price is changing.
How does U.S. shale oil production affect the current price of oil?
In short, shale is rock that contains oil and natural gas. Think of shale as energy yet to be tapped. The more shale the U.S. accesses, the more energy we’ll have—and the more easily oil prices can keep from spiking as much thanks to a greater supply.
How does the current price of oil impact inflation and the broader economy?
When oil is expensive, it tends to make everyday items cost more. This can be related to energy (your heating, gas utilities, etc.), but it’s also due to the logistics involved with making those items accessible to you. Shipping, for example, can affect the price of things at the grocery store, as it’s more expensive to get those products from warehouses and farms onto the shelf.
Scotiabank’s conditional GBP/USD objective sits above consensus after Pound Sterling tests the 1.3650/60 resistance area
The Pound to US Dollar (GBP/USD) exchange rate has tested the mid-1.36s, putting Scotiabank’s conditional route towards 1.41 into focus.
ERUK market data show GBP/USD reached an intraday high near 1.3675 before slipping back towards 1.3645, so the sustained push required by Scotiabank has not yet occurred.
The bank’s scenario depends on a durable advance beyond the 1.3650/60 area, which has contained Sterling near its early-May peak.
It is a notably bullish technical case: ERUK’s Research Currency Forecast Sentiment Survey places the median fourth-quarter forecast at 1.3446 and the top of the surveyed range at 1.40.
Scotiabank analysts noted the recent move reflected broad US Dollar weakness more than a sudden improvement in UK fundamentals.
Nevertheless, the bank judged the technical structure to be firmly positive after GBP/USD twice defended the 1.3150 area during April and June.
The strategists said “a sustained push above 1.3650/60 implies potential for an extension towards the 1.41 zone over the balance of the year”.
That makes 1.41 a possible extension rather than a guaranteed year-end destination, with Sterling still needing to establish former resistance as support.
1.3848 as the intermediate test
Sucden Financial analysts highlighted 1.3650/60 as the breakout zone and said the next broader objective was 1.3848.
Sucden described the set-up as one “with the January high around 1.3848 representing a broader upside target”.
The level therefore offers an intermediate test of whether Scotiabank’s larger scenario is gaining traction.
The two institutions reach a similar bullish conclusion but on different horizons.
Sucden’s 1.3848 is the first substantial obstacle above the trigger, while Scotiabank’s conditional 1.41 objective extends through the balance of 2026.
Sucden placed initial support near 1.3600 and a deeper cushion around 1.3500, where the 20-day average and 30-day volume-weighted average price reinforce the technical floor.
A daily close below 1.3600 would weaken the breakout case and expose 1.3500, while a sustained hold above 1.3650/60 would strengthen the route towards 1.3848 and 1.41.
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Our currency coverage draws on live market data, official economic releases and published bank research.
The USD/JPY pair continues to face stiff resistance at the 20-day exponential moving average (EMA), a level that has repeatedly capped upside attempts over the past sessions, as of the latest trading data. Despite intermittent dollar bounces, the yen remains supported by growing expectations of a policy shift from the Bank of Japan, keeping the pair’s recovery momentum in check.
Why the 20-Day EMA Matters for USD/JPY
The 20-day EMA is a widely watched short-term trend indicator. In the current USD/JPY setup, it has acted as a dynamic ceiling, preventing the pair from extending any meaningful rebound. This technical barrier reflects a broader sentiment shift: traders are reluctant to push the dollar higher against the yen while the Bank of Japan signals a potential exit from its ultra-loose monetary policy.
As of this week, the pair has tested the 20-day EMA multiple times but has failed to close above it, suggesting that sellers are defending the level. A sustained break above this moving average could open the door for a move toward the next resistance zone, but until then, the bias remains tilted to the downside.
Fundamental Drivers Behind Yen Strength
The yen’s resilience is not just a technical phenomenon. Market participants are increasingly pricing in a possible policy normalization by the Bank of Japan, especially after recent comments from officials hinting at a shift away from negative interest rates. This has narrowed the yield differential between U.S. and Japanese bonds, reducing the dollar’s appeal.
Additionally, global risk sentiment has been fragile, with investors seeking safe-haven assets. The yen, despite its low yield, often benefits during periods of uncertainty. These fundamental factors align with the technical picture, creating a coherent narrative for the pair’s inability to rally.
What This Means for Traders
For traders, the 20-day EMA serves as a key level to watch. A daily close above it could signal a short-term bullish reversal, while a rejection from the level would confirm continued bearish pressure. Support levels below the current price are seen at recent swing lows, and a break below those could accelerate the decline.
The broader implications extend beyond intraday trading. If the Bank of Japan indeed tightens policy, the yen could strengthen further, potentially pushing USD/JPY to levels not seen in months. This would have ripple effects on Japanese exporters and global carry trades, making the pair a focal point for forex markets.
Conclusion
USD/JPY remains constrained by the 20-day EMA, with the technical barrier aligning with fundamental headwinds from Bank of Japan policy expectations. The pair’s direction hinges on whether buyers can overcome this resistance, but the prevailing sentiment suggests a cautious approach. As always, traders should monitor central bank communications and key economic data for further clues.
FAQs
Q1: What is the 20-day EMA and why is it important for USD/JPY? The 20-day EMA is a moving average that smooths price data over the past 20 days, giving more weight to recent prices. It is a key technical indicator used by traders to gauge short-term trends. In USD/JPY, it has recently acted as resistance, meaning the pair has struggled to rise above it, indicating bearish pressure.
Q2: How could Bank of Japan policy changes affect USD/JPY? If the Bank of Japan shifts away from its ultra-loose monetary policy, it would likely strengthen the yen as interest rate differentials narrow. This would make the dollar less attractive relative to the yen, potentially pushing USD/JPY lower.
Q3: What should traders watch for a potential breakout? Traders should watch for a daily close above the 20-day EMA, which could signal a bullish reversal. Additionally, monitoring U.S. economic data and Federal Reserve commentary, as well as any BoJ statements, will provide clues about the pair’s next move.
Gold prices extended their rally on [current date], with XAU/USD climbing to [price] as persistent US debt concerns continued to drag the US Dollar lower, boosting demand for the safe-haven metal.
What’s Driving the Gold Rally?
The primary catalyst for gold’s upward momentum is the ongoing weakness in the US Dollar, which has been pressured by escalating concerns over the US government’s debt levels and fiscal sustainability. As the dollar weakens, gold becomes more attractive to international buyers, as it is priced in dollars, and its relative value increases.
Additionally, market participants are closely monitoring the US debt ceiling negotiations and the potential for a government shutdown, which have historically led to increased volatility and a flight to safe-haven assets like gold. The uncertainty surrounding these fiscal issues has also weighed on Treasury yields, further supporting gold prices.
Technical Outlook for XAU/USD
From a technical perspective, gold has broken above key resistance levels, confirming a bullish trend. The recent rally has pushed the price above the 50-day and 200-day moving averages, a signal often interpreted by traders as a strong bullish indicator. Momentum indicators, such as the Relative Strength Index (RSI), are also suggesting that the uptrend has room to continue, though the market may be approaching overbought conditions in the short term.
Key Levels to Watch
Traders are now eyeing the next resistance level at [price], with a potential target of [price] if the rally continues. On the downside, support is seen at [price], which could be tested if the dollar stabilizes or if there is a shift in market sentiment.
Why This Matters to Investors
For investors, the ongoing rally in gold highlights the metal’s role as a hedge against economic uncertainty and currency devaluation. With the US debt situation unresolved, gold may continue to be a preferred asset for those looking to diversify their portfolios. However, it is important to note that gold prices are also influenced by a variety of factors, including interest rates, inflation, and global geopolitical events, so investors should remain cautious and consider a balanced approach.
Conclusion
In summary, gold prices are extending their rally as US debt concerns continue to undermine the US Dollar. The outlook remains positive for gold in the near term, but traders should be mindful of potential volatility and key technical levels. As always, staying informed about macroeconomic developments is crucial for making sound investment decisions.
FAQs
Q1: Why does the US debt situation affect gold prices? When there are concerns about US debt, the US Dollar often weakens because investors worry about the country’s fiscal health. Since gold is priced in dollars, a weaker dollar makes gold cheaper for foreign investors, increasing demand and pushing prices higher.
Q2: What are the key technical levels to watch in gold? Currently, the next resistance level is around [price], and if broken, gold could target [price]. On the downside, support is at [price], which could be tested if the dollar strengthens or market sentiment shifts.
Q3: Is it a good time to invest in gold? Gold can be a good addition to a diversified portfolio, especially during times of economic uncertainty. However, it’s important to consider your investment goals and risk tolerance, and to consult with a financial advisor before making any decisions.
MCX Copper (31 Aug) at Rs 1,384.15/kg (+0.91%) on 21 Aug 2026. High: Rs 1,386.00. Low: Rs 1,375.50. Support: Rs 1,375. Resistance: Rs 1,386.00.
Quick Answer
The copper price prediction for Monday is sideways to mildly bullish. MCX Copper (31 Aug) closed at Rs 1,384.15/kg (+0.91%) on Friday 21 August, recovering alongside the broader commodity rally that saw all six MCX commodities gain on Friday. Ankit Jaiswal’s copper price prediction for Monday places support at Rs 1,375 to 1,377 and resistance at Rs 1,386.00.
The copper price prediction for Monday follows a Friday session where MCX Copper opened at Rs 1,376.95, reached Rs 1,386.00, and settled at Rs 1,384.15. Ankit Jaiswal, Research Analyst at Univest, notes that the copper price prediction for Monday reflects improving global industrial sentiment — Nifty Metal gained 0.86% on Friday, Hindustan Copper rose 0.90%, and MCX Copper’s 0.91% gain confirms this sector-level positive momentum heading into Monday.
Kunal Singla, Research Analyst at Univest, observes that the copper price prediction for Monday benefits from the broader commodity rally: gold breaching Rs 1,60,000, silver gaining 1.27%, and crude oil rising 0.61% all signal risk-on commodity sentiment that typically extends to base metals like copper. The Monday MCX Copper 24 Aug options expiry adds intraday volatility to the copper price prediction for Monday, with the Rs 1,400 call seeing heavy volume on Friday.
Copper Price Prediction for Monday: Technical Analysis
Ankit Jaiswal’s copper price prediction for Monday identifies Rs 1,375 to 1,377 as the immediate support (near Friday’s low of Rs 1,375.50). A hold above Rs 1,375 in the copper price prediction for Monday confirms buyers are active at lower levels. Resistance in the copper price prediction for Monday stands at Rs 1,386.00, with a break above targeting Rs 1,392 to 1,395.
Trend for Monday 24 August 2026: Sideways to Mildly Bullish Support: Rs 1,375 to 1,377 | Rs 1,364 Resistance: Rs 1,386.00 | Rs 1,392 to 1,395
Global Cues for Copper Prediction for Monday
COMEX Overnight: COMEX gold and silver levels Monday morning are the primary pre-open cue for MCX precious metals on Monday. Watch spot gold above $3,400/oz and silver above $30.50/oz.
Iran-Strait of Hormuz: Ongoing supply risk remains the dominant crude oil and commodity driver for Monday. Any weekend escalation or resolution will be the primary opening catalyst.
US Dollar Index: A weaker DXY heading into Monday would support precious metals and commodities across the board on Monday.
Key Events for Monday 24 August 2026
MCX Silver Mini and Copper 24 Aug options expire Monday 24 August — elevated intraday volatility expected in early Monday trade
COMEX levels Monday morning set the MCX precious metal opening for Monday
Iran-Strait of Hormuz weekend news is the primary catalyst for crude oil and energy commodities on Monday
US EIA natural gas report and OPEC+ communications over the weekend will shape the energy complex on Monday
Buy MCX Copper near Rs 1,375 with stop below Rs 1,364 targeting Rs 1,386.00 in the copper price prediction for Monday
A break above Rs 1,386 targets Rs 1,392 to 1,395 in the copper price prediction for Monday; MCX 24 Aug options expire Monday
Watch Hindustan Copper and Hindalco as leading equity signals for the copper price prediction for Monday
Check COMEX copper overnight for the global base metal sentiment confirmation in the copper price prediction for Monday
What Does Sentiment Indicate for Copper Prediction for Monday?
Sentiment for the copper price prediction for Monday is cautiously positive. Friday’s broad commodity rally — all six MCX commodities gaining — reflects risk-on sentiment that benefits base metals. Ankit Jaiswal notes that Nifty Metal’s 0.86% Friday gain is a strong equity-side validation of the copper price prediction for Monday.
Kunal Singla observes that Monday 24 August is also the MCX Copper 24 Aug options expiry, which will create intraday volatility in the copper price prediction for Monday. The Rs 1,400 call saw significant volume on Friday, indicating institutional positioning for a continued recovery in the copper price prediction for Monday.
Risks to Copper Prediction for Monday
A sharp reversal in COMEX copper overnight would weaken the copper price prediction for Monday
MCX Copper 24 Aug options expiry on Monday creates elevated intraday swings in the copper price outlook for 24 August
China industrial production data released over the weekend could pressure the Monday’s MCX copper price forecast
A broad commodity sell-off reversing Friday’s gains would pull the Wednesday’s copper price outlook toward support
the 24 August copper price outlook, 24 August 2026, is sideways to mildly bullish. MCX Copper closed at Rs 1,384.15/kg (+0.91%) on 21 August. Ankit Jaiswal places support at Rs 1,375 and resistance at Rs 1,386.00.
Kunal Singla notes Monday 24 Aug MCX Copper options expiry adds intraday volatility — use defined stop-losses in the MCX copper price forecast for Monday. Download the Univest app for live MCX copper tracking.
Disclaimer: Investments in securities are subject to market risk. This content is for educational purposes only and does not constitute investment advice. Univest Research Analyst Registration No. INH000013776.
Frequently Asked Questions on Copper Prediction for Monday
What is the copper price’s 21 August outlook, 24 August 2026?
Ans. the copper price outlook for 24 August is sideways to mildly bullish. MCX Copper closed at Rs 1,384.15/kg (+0.91%) on 21 August. Ankit Jaiswal places support at Rs 1,375 and resistance at Rs 1,386.00 for the Monday’s MCX copper price forecast.
What are MCX copper levels for Monday?
Ans. Support at Rs 1,375 to 1,377 and strong support at Rs 1,364. Resistance at Rs 1,386.00 and Rs 1,392 to 1,395 in the Wednesday’s copper price outlook.
Does MCX options expiry affect the 24 August copper price outlook?
Ans. Yes, MCX Copper 24 Aug options expire Monday, adding intraday volatility. Ankit Jaiswal recommends using futures for directional the MCX copper price forecast for Monday trades.
What equity stocks reflect the copper price’s 21 August outlook?
Ans. Hindustan Copper (+0.90% on 21 Aug) and Hindalco (+0.75%) are the primary equity proxies for the copper price outlook for 24 August. Watch these for sector-level confirmation.
What is the copper trading strategy for Monday?
Ans. Buy MCX Copper near Rs 1,375 with stop below Rs 1,364 targeting Rs 1,386.00 in the Monday’s MCX copper price forecast. A break above Rs 1,386 targets Rs 1,392.
Note: This blog is for information purpose only. Investments and trading are subject to market risks, read all scheme related documents carefully.
The Pound to Dollar exchange rate (GBP/USD) surged to a six-month high of 1.3675 as persistent concerns over US Treasury intervention and the outlook for long-term bond yields kept the Dollar under heavy pressure. Stronger-than-expected UK services data added to Sterling support, although the pair surrendered part of its advance after breaking above the May highs.
GBP/USD Forecasts: Six-Month High
The Pound to Dollar (GBP/USD) exchange rate extended its advance on Friday, reaching fresh six-month highs before giving back part of the move later in the session.
GBP/USD climbed as high as 1.3675, its strongest level since February 11, before retreating towards 1.3645.
The Dollar remained under pressure amid concerns that US Treasury efforts to suppress long-term bond yields could ultimately undermine confidence in the currency.
The Dollar index remained close to three-month lows, leaving Sterling on course for a fourth consecutive weekly gain against the US currency.
According to MUFG; “There appears to now be more avenues opening for US dollar weakness ahead rather than dollar strength.”
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The Pound also benefited from continued expectations that the Bank of England could still raise interest rates before year-end, despite economists generally expecting policy to remain unchanged.
UoB had identified resistance just above 1.3650, with a sustained break potentially strengthening the case for a move towards the 1.3800 region.
That resistance was breached during Friday’s session, although GBP/USD was unable to maintain the move above 1.3670.
Friday’s UK business surveys provided further evidence that the economy retained momentum during the third quarter.
The S&P Global services PMI increased to 52.8 in August from 52.1 previously, reaching a six-month high and comfortably beating expectations for a slowdown.
The stronger services performance helped offset a modest easing in the manufacturing PMI to 51.5.
Business optimism in the services sector also rose to a seven-month high, while new orders improved.
The figures followed stronger-than-expected second-quarter GDP data and reinforced expectations that the UK economy could expand by around 0.3% during the third quarter.
There were less encouraging signals elsewhere.
Retail sales volumes excluding fuel fell 0.9% in July after a strong June performance, while government borrowing figures showed an unexpected budget deficit.
Nevertheless, the broader UK data flow has remained sufficiently resilient to keep expectations of another Bank of England rate increase alive.
US Treasury Policy Keeps Dollar under Pressure
The US Treasury’s decision to increase purchases of longer-dated bonds remained an important driver for currency markets.
The Treasury announced on Wednesday that it would at least double the size of buybacks of longer-dated securities in an attempt to improve liquidity and contain the surge in long-term yields.
Danske Bank commented; “The increased reliance on short-end issuance links the government’s financing costs more closely to the Fed’s monetary policy.”
The bank also suggested that renewed concern about Federal Reserve independence may have contributed to broad Dollar weakness.
ING commented; “Yesterday’s intervention in the Treasury market suggests the recent rise in longer-dated yields has touched a raw nerve.”
It added that a more activist Treasury reduced one potential risk to financial markets and was “slightly dollar negative”.
MUFG also warned that the policy could damage confidence in US assets.
The bank commented; “Even if the Treasury buy-back plan does contain yields, the US dollar now remains more vulnerable to the downside on the fact that yields are potentially lower.”
In practice, long-term Treasury yields have already started rising again despite the buyback announcement, suggesting investors remain concerned about the US fiscal outlook.
The 30-year yield had reached its highest level since 2007 earlier in the week, driven by concerns over debt sustainability, inflation and heavy issuance.
Jackson Hole Takes on Added Importance
MUFG also highlighted the implications for Federal Reserve policy.
The bank commented; “What this buyback announcement does mean is that the Jackson Hole speech next week by Fed Chair Warsh has now become more important.”
Fed Chair Kevin Warsh will face a difficult balancing act.
A strongly hawkish message could trigger another sell-off in Treasuries and undermine the Treasury’s attempts to stabilise long-term yields.
Conversely, a softer stance risks reinforcing concerns that monetary policy is becoming too accommodating or influenced by the administration’s preference for lower borrowing costs.
The minutes from July’s Federal Reserve meeting confirmed that policymakers had become more concerned about inflation, with several officials prepared to support another rate increase if price pressures failed to ease.
Capital Economics nevertheless commented; “The minutes of the Fed’s July meeting confirmed that the rate-setting committee had become more hawkish since the June meeting but, with the inflation, labour market and activity data since then all on the soft side, there is little to suggest that interest rate hikes are imminent.”
Markets currently place roughly a one-third probability on a September Fed increase.
Near-Term GBP/USD Forecast: 1.3675 Break Opens Route towards 1.38
GBP/USD’s move to 1.3675 has taken the pair beyond the May highs and strengthened the short-term technical picture.
A sustained break above the 1.3670-1.3680 area would bring 1.3700 into immediate focus, followed by the 1.3800 region highlighted by UoB.
Sterling could receive further support if resilient UK data keeps Bank of England tightening expectations alive while investors continue to scale back expectations for Federal Reserve action.
The Dollar remains vulnerable, however, for reasons that extend beyond interest-rate differentials.
Treasury intervention has revived wider concerns over the US fiscal outlook and the risk that attempts to suppress bond yields shift pressure from Treasuries onto the currency instead.
On the downside, 1.3600 should now provide initial support for GBP/USD.
A sustained retreat below this level would weaken the immediate bullish structure and bring the 1.3550 area back into focus.
For now, the combination of resilient UK economic data and persistent unease surrounding US fiscal and bond-market policy leaves Sterling with a firm underlying bias against the Dollar.
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