Forex GBP/USD: Pound Weakens Ahead of BoE and Policy Minutes
The British pound continues to lose ground, probing support at 1.3580 after an early week “bearish” impulse. While market fundamentals remain little changed, attention today turns to the Financial Policy Committee’s report and June BoE meeting minutes, which could provide fresh clues on the timing of UK rate cuts. Consensus expects the next 25 basis point cut at the August 7 BoE meeting, with two additional moves likely before year-end. On the US side, business sentiment (NFIB index) edged down to 98.6 (vs. 98.7 forecast), while Redbook retail sales rose 5.9% week-on-week. The pound remains relatively stable as the UK became the first country to lock in a 10% US import tariff, though the British economy still faces sector-specific restrictions, notably in steel and aluminum exports.
AUD/USD: Volatile Consolidation as RBA Holds Rates
The Australian dollar is showing mixed price action near 0.6530 after a sharp corrective rebound yesterday largely erased Monday’s bearish drop—though the rally quickly lost steam, with the pair surrendering half its gains by session’s end. The Reserve Bank of Australia’s latest decision to keep its policy rate at 3.85% (6-3 vote) provided some short-term support, citing controlled inflation and a solid labor market but highlighting uncertainty around demand, supply, and US tariff policy. Trump’s extension of the tariff deadline to August 1 reflects slow progress in negotiations; only the UK and Vietnam have signed final deals, while talks with China remain unresolved despite earlier concessions. The AUD also found support from NAB business confidence data, with June sentiment rising to 5.0 and business conditions to 9.0. Today, China’s CPI came in slightly positive at +0.1% YoY (vs. –0.1% in May), helping to stabilize sentiment despite a further slide in PPI (–3.6% YoY).
USD/JPY: Dollar Gains as Tariff Risks Loom
USD/JPY is climbing through fresh local highs, riding a short-term bullish trend as investors await tonight’s FOMC minutes. Fed Chair Jerome Powell reiterated that rate cuts would come later in 2025, but left the timing vague. Strong recent US jobs data has nearly eliminated the odds of a July cut, although a September move is still on the table. Trade uncertainty remains high: the US has extended its tariff moratorium, but from August 1 will impose a 25% blanket tariff on goods from Japan, Kazakhstan, and South Korea (exempting firms with US-based production). This rate could rise if these countries retaliate. Recent Japanese macro data had little impact, with Eco Watchers' current index rising to 45.0 (from 44.4) but missing expectations.
XAU/USD: Gold Slightly Weaker on US Labor Strength
Gold is trading slightly lower, testing support at $3300 in early trade. Sentiment remains cautious as traders weigh US trade policy shifts and resilient labor market data. Trump’s tariff extension allows partners extra time for deal-making, but the dollar is still buoyed by robust June NFPs: US job creation hit 147,000 (vs. 110,000 expected, up from a revised 144,000), while wage growth slowed to 3.7% YoY and unemployment dropped to 4.1%. This resilience has cooled bets on a July Fed rate cut, dampening gold’s near-term appeal.