Forex GBP/USD: Sterling Edges Higher Despite Weak Retail Sales
The British pound is holding above 1.3480 against the dollar, maintaining a mild bullish trend despite disappointing retail sales. UK retail volumes dropped 2.7% in May, missing expectations and following a 1.3% rise in April; annual sales fell 1.3% vs. an expected 1.7% increase. Sales excluding fuel were also down. Weak consumer spending may allow the Bank of England to adopt a more dovish stance. The BoE left rates unchanged at 4.25% (by a 6–3 vote), with three policymakers favoring a cut. Given the UK’s fragile economy, the BoE is reluctant to pre-empt the Fed, and an extended period of high rates is seen as unsustainable for Britain.
AUD/USD: Aussie Rebounds as China Holds Steady
The Australian dollar is rebounding toward the 0.6500 mark, recouping recent losses as the People’s Bank of China kept key lending rates unchanged. However, AUD remains under pressure from weak labor market data: full-time employment rose by just 38.7K in May (down from 58.6K), part-time jobs dropped by 41.2K, and total employment decreased by 2.5K against a forecasted 25K gain. U.S. markets are closed for Juneteenth, so traders focus on the Fed’s signals. Updated Fed projections showed a more hawkish inflation path and modestly lower GDP growth for 2025.
USD/JPY: Dollar Retreats as Yen Eyes BoJ Hike
The dollar is retreating modestly from recent highs against the yen. Investors are closely watching Japan’s inflation data, which is driving expectations of policy tightening by the Bank of Japan. Core CPI (ex-food, ex-energy) rose 3.3% in May (vs. 3.0% in April), and the index excluding only fresh food hit 3.7% (above expectations). The broader index edged down to 3.5%. The BoJ left rates at 0.50% but signaled a possible hike if inflation risks rise, potentially as early as July. Fed forecasts suggest a higher inflation path and a lower GDP trajectory for the U.S., adding further uncertainty to USD/JPY direction.
XAU/USD: Gold Under Pressure as Central Banks Hold Steady
Gold prices remain under pressure, breaking below $3350 amid sustained bearish momentum. The metal is weighed down by the Fed’s and Bank of England’s decisions to keep monetary policy unchanged, while the Swiss National Bank cut rates to 0.0%. Markets are still pricing in a possible Fed rate cut by September, contingent on softer inflation data. Easing Middle East tensions, after President Trump delayed a decision on U.S. military involvement in Iran, also limit gold’s safe-haven appeal. However, recent reports of Israeli airstrikes on Iranian nuclear facilities have injected new volatility and risk sentiment.