The selling pressure on Gold is now decelerating, allowing the yellow metal to reclaim the key $4,500 mark per troy ounce on Tuesday. In the meantime, the precious metal’s decline comes amid further gains in the US Dollar, which reflect rising bets for a tighter-for-longer Fed and unabated geopolitical jitters.
XRP under pressure as network growth slows, ETF inflows fade
Ripple (XRP) is trading above $1.37, struggling to find a solid footing at the time of writing on Tuesday amid a broad crypto market drawdown. The persistent decline marks the fifth consecutive day of sellers tightening their grip, leaving XRP vulnerable.
Risk appetite is generally cooling, as evidenced by the crypto Fear & Greed Index, which measures market sentiment, falling to 25 in the Extreme Fear territory on Tuesday, down from 28 the previous day and 49 last week.
XRP network growth cools amid modest ETF inflows
The XRP Ledger (XRPL) continues to face declining adoption, with fewer new users joining the protocol. According to Santiment data, newly created addresses on the network dropped sharply near 780 on Tuesday, from roughly 2,600 the previous day.
Such a decline is an early signal of fading user adoption, interest and demand for the XRP. Fewer users on the blockchain could mean low network activity or speculative inflows needed to reinforce a steady bullish outlook, shifting the edge toward defensive positioning until growth metrics stabilize or reverse.
XRP spot Exchange-Traded Funds (ETFs) mirror the protocol’s weakness and loss of appetite, as inflows plunged a mere $750,000 on Monday, from nearly $11 million on Friday. Although cumulative inflows steadied at $1.39 billion, net assets under management narrowed to $1.14 billion from $1.18 billion over the same period.
Sustaining inflows into the ETFs could help stabilize sentiment and raise the odds of a recovery. However, if institutions sense uncertainty and pull their funds, declines could accelerate.
Price analysis: XRP slides as pressure builds
XRP trades above $1.37, extending its retreat below a dense cap of moving averages and a recently broken ascending trendline, which keeps the near-term bias bearish. Momentum indicators reinforce the downside tilt, with the Relative Strength Index (RSI) slipping to about 43 on the daily chart and the Moving Average Convergence Divergence (MACD) histogram turning negative below the zero line, even as the Money Flow Index (MFI) stabilizes near 50, hinting at balanced but fragile flows.
On the topside, initial resistance lies at the ascending trendline break near $1.40, followed by the 50-day Exponential Moving Average (EMA) at $1.41, which would need to be overcome to ease immediate selling pressure. Above that barrier, the 100-day EMA at $1.49 marks the next supply area ahead of the more distant 200-day EMA around $1.69, which frames the broader downbeat structure.
If the sell-off continues, XRP could drop to retest a short-term support at $1.35, with extended pressure likely to expose a deeper demand level at $1.30.
(The technical analysis of this story was written with the help of an AI tool.)
Bitcoin, altcoins, stablecoins FAQs
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
Bitcoin dominance is the ratio of Bitcoin’s market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
Canada New Housing Price Index (MoM) below expectations (0%) in April: Actual (-0.4%)
Gold maintains its offered tone through the early European session, and remains well within striking distance of the lowest level since March 30, set the previous day. Despite renewed hopes for a potential US-Iran peace deal, investors remain skeptical amid major disagreements over Tehran’s nuclear program and the Strait of Hormuz. Furthermore, hawkish US Fed expectations assist the US Dollar to regain positive traction and act as a headwind for the non-yielding bullion.
Why the Pound is starting to trade like an emerging-market currency
The Bank of England (BoE) is being priced to hike around 70 basis points before year-end. The 10-year gilt is near 5.2%, its highest since the 2008 financial crisis. The 30-year sits at levels last seen in 1998. None of it is helping the Pound. The Sterling is the second-weakest G10 currency against the US Dollar this year, and with GBP/USD cracking through 1.3400 to its lowest since early April, the textbook relationship between rising yields and currency strength has stopped working.
This piece walks through why it broke: an inflation-linker feedback loop connecting every Brent print directly to UK fiscal arithmetic, a BoE trapped in a box where hiking and holding both hurt the Pound, and the broader reframe traders need to make about Sterling, which has stopped behaving like a G10 currency and started behaving like emerging-market debt.
The textbook is broken
BoE Chief Economist Huw Pill voted for a rate increase at the last meeting and has continued to argue for more tightening to offset the energy shock. Under the standard G10 framework, that hawkish repricing should be lifting Cable bids. However, GBP continues to struggle against its major counterparts. Only the Kiwi has fared worse against the US Dollar this year.
The 10-year gilt yield tells the other half of the story: Yields have climbed roughly 85 basis points since late February and now sit above 5%. The 30-year is at its highest since 1998. Some outlets have labeled the political risk component the “Burnham Premium in UK assets”, a reference to Manchester mayor Andy Burnham’s positioning to challenge Prime Minister Keir Starmer after Labour’s local election collapse. The leadership question is real, but the structural problem runs deeper, and it explains why this gilt selloff is hitting Sterling instead of supporting it.
The linker loop nobody wants to price
The UK runs the highest share of inflation-linked debt in the G10. Roughly a quarter of the gilt stock is index-linked, several times the proportion carried by the US, Germany, or Japan. That creates a feedback loop uniquely brutal for British fiscal arithmetic.
The chain works like this. Brent crude has been trading above $107 a barrel on stalled US-Iran negotiations over the Strait of Hormuz, with US President Donald Trump’s recent comment about not needing the Strait open pushing prices higher. Higher Oil feeds directly into UK headline inflation, with March Consumer Price Index (CPI) already at 3.3% and services inflation at 4.5%. Higher inflation lifts UK breakevens, which raises the coupons on every inflation-linked gilt the Debt Management Office (DMO) has outstanding. That mechanically increases debt service, deteriorates the fiscal trajectory, raises term premium across the curve, and sells off the long end.
In G10 peers, the Crude Oil-to-debt-service transmission takes years to show up through refinancing cycles. In the UK, it shows up within months on linker resets. Goldman Sachs analysts recently dismissed the DMO’s pivot toward more Treasury bill issuance as offering only “limited” fiscal improvement. The structural problem doesn’t unwind through funding-mix tweaks. Brent above the $108 to $110 zone is essentially a direct short on Sterling, transmitted through a balance sheet that most G10 currency traders don’t model.
The BoE’s box
That brings us to monetary policy, where the trap closes. The BoE has two options, and both hurt Sterling.
Option one: Hike. Pill’s faction wants it, and the swap curve is positioned for it. But every hike compounds debt service on conventional gilts, accelerates the fiscal deterioration already being priced, and validates the political case for fiscal loosening under a future Labour Party leadership. Hiking into fiscal stress isn’t currency-positive when the stress was the original problem.
Option two: Hold or pivot dovish. That lets inflation expectations unanchor at a moment when Oil is still pushing through the system and the BoE is already widely viewed as too patient. The 30-year gilt at 1998 highs is partly a vote that the BoE has lost the inflation credibility battle. Sarah Breeden has pushed back, arguing the Middle East conflict is unlikely to drive an inflation surge on the scale of 2022, but the curve isn’t buying it.
This is what fiscal dominance looks like in practice. The central bank can no longer set the price of money independently of the sovereign’s funding constraints. Hawkish dissent that would normally be a currency tailwind has become a fiscal-deterioration accelerator. A dovish pivot that would normally cap currency upside has become an inflation-credibility risk. Either way, the Pound loses.
Cable has gone emerging market
Step back from the mechanics and the reframe writes itself. Currencies trading on fiscal credibility rather than rate differentials are emerging-market currencies. The playbook for trading Turkish Lira, Brazilian Real, or South African Rand is exactly this: watch the fiscal trajectory, the political risk premium, and the central bank’s room to maneuver. Rate hikes are not currency-positive when they signal a sovereign losing control of its own balance sheet.
Kit Juckes at Societe Generale has captured the dynamic cleanly: A future Labour leadership almost guarantees higher spending, Chancellor Rachel Reeves is widely expected to raise taxes, including possible wealth and housing measures at the Autumn Budget, and 2026 Gross Domestic Product (GDP) forecasts have been cut from 1.1% to 0.8%, largely on the energy cost pass-through. That combination leaves Sterling with almost nothing to work with. Burnham’s emergence after MP Josh Simons stepped aside has added a leadership-risk premium on top, with Wes Streeting and Angela Rayner also in the mix and Rayner carrying a similar bond-market risk profile to Burnham.
For traders running Cable on the old playbook, the past month has been a series of stop-outs. The new playbook treats Sterling closer to a high-yield credit than a developed-market currency.
Trading the regime
In application, Brent breakouts above the $108 to $110 zone are direct Sterling shorts. The transmission to UK fiscal arithmetic runs through linkers within the same monthly cycle, faster than in any other G10 economy.
Hawkish BoE surprises should be sold, not bought. The instinct to buy Sterling on a hawkish hold or a 25-basis-point hike is the dominant trap right now. Fade the spike: The curve is already priced for it and the fiscal damage outweighs the carry support.
UK 10-year breakevens are the cleanest Sterling sentiment proxy that almost no one is watching. They lead both the political risk premium and the Cable selloff. Build them into the dashboard.
GBP/EUR is the cleaner political-risk expression than Cable, stripping out the Federal Reserve (Fed) repricing story and isolating the UK fiscal and political premium.
The Autumn Budget is the binary unwind event: Until Reeves delivers credible tax measures or genuine consolidation, every gilt auction tail is a Sterling trade. After the Budget, the political risk premium could compress quickly if the numbers add up. That is the asymmetric setup into autumn.
The market’s old assumption was that the BoE could rescue Sterling. The current assumption is that no one can.
XRP and XLM outlook: Bears in control of the momentum
Ripple (XRP) and Stellar (XLM) remain under pressure on Tuesday as bearish momentum continues to dominate after correcting nearly 5% and 12%, respectively, in the previous week. XRP and XLM both trade beneath all major Exponential Moving Averages (EMAs), reflecting sustained selling pressure. In addition, weakening momentum indicators and rising short positioning among traders for these altcoins suggest the downside bias could persist in the near term.
Short bets rise among XRP and XLM traders
CoinGlass’ long-to-short ratios for XRP and XLM are 0.90 and 0.93, respectively, on Tuesday, both near their lowest levels over the month. This ratio, below 1, reflects bearish sentiment in the market, as more traders are betting the asset’s price will fall.
XRP technical outlook: Deeper correction ahead
XRP is trading at $1.387, maintaining a bearish near‑term bias as it trades beneath the main EMAs. The 50‑day EMA at $1.415 is the first cap overhead, with the upper boundary of the prevailing downward parallel channel around $1.442 reinforcing supply above spot. The 100‑day and 200‑day EMAs, at $1.486 and $1.694, respectively, extend a broader topside ceiling, while a Relative Strength Index (RSI) reading near 45 and a negative Moving Average Convergence Divergence (MACD) histogram both hint that downside pressure still outweighs buying interest.
On the downside, the next notable cushion aligns with horizontal support near $1.300, where buyers could attempt to slow the decline if selling resumes.
On the topside, immediate resistance is seen at the 50‑day EMA at $1.415, followed by the channel boundary around $1.442; a daily close above these levels would be needed to ease the current bearish tone and expose the higher EMA barriers at $1.486 and $1.694, ahead of the more distant horizontal resistance around $1.900.
XLM technical outlook: Slips below key EMAs
Stellar price trades at $0.147, extending its slide beneath all the key EMAs and keeping the near‑term bias bearish. The 50‑day EMA at $0.161, together with the 23.6% Fibonacci retracement of the latest cycle at $0.164 and the 100‑day EMA at $0.171, now sit overhead and suggest the pair remains capped while below this cluster.
The RSI on the daily chart at 35 hovers just above oversold territory, and the MACD indicator remains negative, both reinforcing persistent downside pressure rather than a completed bottom.
On the topside, initial resistance is located at the 50‑day EMA near $0.161, followed by the 23.6% Fibonacci retracement at $0.164; a daily close above these would be needed to ease immediate selling pressure. Further up, the 100‑day EMA at $0.171 and the 38.2% Fibonacci retracement at $0.181 precede a more substantial barrier at the 50% retracement level near $0.195, with the 200‑day EMA at $0.201 reinforcing broader bearish control while price holds below it.
On the downside, the only nearby structural support is the February low at $0.136, where buyers could attempt to stem the decline if bearish momentum persists.
(The technical analysis of this story was written with the help of an AI tool.)
Pound Sterling rides the gilt rout while Westminster wobbles
Cable bottomed at the 1.33 handle in Asian trade and ground higher through London and New York to close back above the 1.34 handle, a session range of roughly 150 pips and a textbook reclaim of the 200-day exponential moving average on the daily chart. The bounce came against the backdrop of a worsening gilt rout, with UK yields climbing as investors digest the political contest now emerging around Prime Minister Keir Starmer’s position. That combination, weaker fiscal backdrop and stronger currency, breaks the usual correlation. The Pound is not rallying because Westminster has stabilised. It is rallying because gilt yields are pushing higher and rate-hike pricing is hardening into the BoE’s June 18 meeting.
The political backdrop is doing none of the heavy lifting
Manchester mayor Andy Burnham, widely viewed as the most fiscally aggressive of the potential Labour leadership challengers, has been positioning to enter the race after MP Josh Simons stepped aside. Health Secretary Wes Streeting has already resigned to make himself available. Angela Rayner, recently cleared by HMRC in a tax probe, is now a possible contender as well. The bond market is reading the field as a clear fiscal risk and selling gilts accordingly, but the foreign exchange market is for now treating the same rise in yields as a hawkish signal for Bank Rate. Eventually one side of this trade gets repriced. For now, the Pound has the benefit of the doubt because the BoE is being pushed by the same energy-driven inflation pulse that has the Federal Reserve (Fed) leaning hawkish.
Monday’s MPC split is the cleaner read
Three BoE speakers in a single day produced exactly the divergence the market expected. Sarah Breeden landed firmly in the dovish camp, hewing to her concerns about UK growth dynamics. Megan Greene came in notably hawkish on inflation persistence. Catherine Mann, the MPC’s most reliable hawk, reinforced the call for tighter policy. The Monetary Policy Committee (MPC) split is not new, but Monday’s lineup made plain that the next move is genuinely unsettled. Money markets are now pricing the June 18 BoE meeting as a live hike, a remarkable repricing for a Bank that was being talked about as cutting just two months ago.
Tuesday’s jobs and Wednesday’s CPI are the real tests
Tuesday’s labour market batch is the first stress test. Consensus looks for Average Earnings ex-Bonus at 3.4% from 3.6%, Claimant Count Change at 27.3K from 26.8K, and the ILO Unemployment Rate steady at 4.9%. Any cooling, particularly in wages, would knock a leg out from under the hawkish trade just as positioning extends. Wednesday is the bigger event by far. Headline CPI is seen at 3.0% YoY from 3.3%, with core CPI at 2.7% from 3.1%. A clean miss on either side would trim June hike odds materially. A hot print does the opposite and likely forces Cable to test the 1.35 handle.
Levels and bias
The 1.33 handle is the line that has to hold. A clean break below opens 1.32 quickly, where April’s lows sit. The 200-day exponential moving average on the daily chart runs through the 1.34 handle and is now reclaimed, with Monday’s 1.3450 high as the immediate intraday cap. Above that, the 1.35 handle is the next round-figure barrier and the 1.3650 level caps the May range. Bias for the week is cautiously constructive while the BoE is in play, with Wednesday’s CPI as the binary catalyst. The political tail risk is real, and any Labour leadership announcement that puts a fiscally aggressive name into pole position would test the 1.33 handle quickly. Fading rallies into the 1.35 handle makes sense if jobs or CPI come in cool. Buying dips toward the 1.34 handle makes sense if the prints reinforce the hike story.
GBP/USD 15-minute chart
Technical Analysis
In the fifteen-minute chart, GBP/USD trades at 1.3434. The pair holds a constructive intraday bias as price extends well above the day’s opening level at 1.3320, indicating firm buying interest on dips. The Stochastic RSI has rebounded from earlier oversold readings and now sits in positive territory, which reinforces the notion of persistent upside momentum while intraday pullbacks remain shallow.
On the downside, initial support is located at the 1.3320 day-open area, where renewed demand would be expected to emerge if the pair unwinds part of its latest gains. As long as GBP/USD stays above this underlying floor, the short-term structure favors further consolidation of recent advances, with momentum conditions suggesting that any corrective phase is likely to be limited rather than a trend reversal.
In the daily chart, GBP/USD trades at 1.3434. The pair holds above the 200-day exponential moving average (EMA) at 1.3406, which lends underlying support, but it remains capped by the 50-day EMA at 1.3473, keeping the broader tone neutral in the near term. The Stochastic RSI has slipped toward the 30 area, hinting that downside momentum is emerging as buyers hesitate beneath the nearby dynamic resistance.
On the topside, a sustained break above the 50-day EMA at 1.3473 would be needed to reopen scope for a more constructive advance. On the downside, the 200-day EMA at 1.3406 forms initial support; a daily close below this level would expose a deeper pullback as short-term momentum weakens.
(The technical analysis of this story was written with the help of an AI tool.)
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.
Strategy scoops $2B in Bitcoin as Iran launches BTC-backed shipping insurance
Strategy announced that it acquired 24,869 Bitcoin (BTC) for approximately $2.01 billion last week, marking one of its largest purchases in recent weeks.
Strategy funds $2 billion Bitcoin purchase through ATM stock offerings
Strategy’s latest acquisition was financed through proceeds from the sale of 19.5 million of its Series A Perpetual Stretch Preferred Stock (STRC) and 430,344 of its Class A common stock (MSTR) under its at-the-market (ATM) program. The offerings generated roughly $2.03 billion in net proceeds, according to a filing with the US Securities and Exchange Commission (SEC) on Monday.
The purchase brings Strategy’s total Bitcoin holdings to 843,738 BTC, accumulated at an aggregate cost of $63.8 billion, implying an average purchase price of about $75,700 per BTC.
The scale of the purchase represents the company’s largest weekly accumulation since late April, when it acquired 34,164 BTC. The addition has pushed Strategy’s Bitcoin yield to 12.6% so far in 2026.
Strategy’s latest purchase follows a Friday SEC filing in which it indicated potential sales of portions of its Bitcoin holdings to fund a planned $1.5 billion repurchase of its 0% Convertible Senior Notes due 2029. The company said it would finance the buyback through a combination of cash reserves, equity issuance and potentially selective Bitcoin sales.
Despite outlining the possibility of BTC sales, Strategy has indicated that any such transactions would be tied to short-term capital management needs, with a broader objective of increasing total holdings over time.
Iran turns to Bitcoin for Strait of Hormuz shipping insurance
Meanwhile, Iran has introduced a Bitcoin-backed shipping insurance platform known as Hormuz Safe, aimed at vessels transiting the Strait of Hormuz, Bloomberg reported on Monday.
The platform enables insurance premiums and claims to be settled in Bitcoin and other crypto assets. Officials have projected that the initiative could generate more than $10 billion in revenue, driven by demand for coverage in the Strait of Hormuz, a critical global energy corridor through which roughly one-fifth of the world’s seaborne Oil supply passes.
Iran previously hinted at similar measures in April, according to reports at the time. Officials allegedly explored a framework to charge tankers a fee of around $1 per barrel of Oil for vessels transiting the Strait of Hormuz, with payments to be potentially made in Bitcoin.
The proposal was attributed to Hamid Hosseini, a spokesperson for Iran’s Oil, Gas and Petrochemical Products Exporters’ Union, and would have applied to ships carrying between 500,000 and 2 million barrels of crude.
Under the framework, shipowners would be required to submit cargo details in advance, after which authorities would determine the applicable fee, while vessels without cargo could pass without charge.
Bitcoin is trading at $76,610 at the time of publication, down 1.8% over the past 24 hours.
United States NAHB Housing Market Index above expectations (35) in May: Actual (37)
GBP/USD sets aside five consecutive daily pullbacks and gets ready to challenge the key 1.3400 barrier on Monday. That said, Cable manages to gather steam on the back of the U-turn in the Greenback, which is now supporting the rebound in the broader risk complex. Meanwhile, the British Pound is expected to remain under scrutiny amid the ongoing political turmoil in the UK, surging gilt yields, and the fragile geopolitical landscape.
British Pound: Downside risk versus US Dollar below 200-DMA – Societe Generale
Societe Generale economists argue that the British Pound (GBP) and Gilts face a pivotal period as the Bank of England (BoE) reacts to persistent inflation and wage pressures, which have slowed the pace of rate cuts and hurt long-end Gilts. They highlight that GBP/USD has pulled back after failing near 1.3660 and slipping below the 200‑DMA, with the moving average around 1.3430 now a key hurdle and warn that inability to clear this level could extend downside towards the March low at 1.3220/1.3150, with a break below opening a deeper downtrend. Intraday, support is seen at 1.3220 and resistance at 1.3430.
Sterling pressured by technical barriers
“For sterling and Gilts, a pivotal week could lie ahead for the BoE and the future of the Starmer government. Inflation and fears of second round effects tied to wages have forced the BoE to go slow on lowering rates and have dented the appeal of Gilts in the long end. There is a non-negligible possibility that chief economist Pill is joined by other MPC members voting for a rate hike at the next meetings if core CPI comes in hot on Wednesday.”
“There could be relief if inflation comes down in April. SG economics forecast a dip in headline to 3.0% yoy and core to 2.6% yoy, in line with consensus. Private sector wages are forecast to rise 3.1% yoy for the 3-month period ending March. Gilts have not been aided by the political storm engulfing the Labour cabinet and a possible swing to the Left.”
“Former Health Secretary Streeting announced his intention to challenge PM Starmer. The return of Burnham to Westminster is not without complications, requiring victory over Reform and the Greens in the Makerfield by-election (likely 18th June). Both Streeting and Burnham want Britain to rejoin the EU but Makerfield voted in favour of leaving in 2016.”
“GBP/USD has staged a steady pullback after encountering strong resistance near 1.3660 earlier this month. The pair has fallen below the 200- DMA, highlighting a lack of steady upward momentum.”
“The moving average, currently around 1.3430, may act as a short-term hurdle. An inability to overcome this resistance could result in continued downside. The March low near 1.3220/1.3150 is next support zone. A break below this may lead to a deeper extension of the downtrend.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Euro declines as risk aversion, Fed rate hike odds increase
EUR/USD remains subdued for the sixth successive day, trading around 1.1620 during the Asian hours on Monday. The pair loses ground as the US Dollar (USD) rises on the US Federal Reserve (Fed) shifting toward a more aggressive policy stance on inflation.
Several Fed officials recently emphasized that controlling inflation is their top priority, even suggesting that further interest rate hikes could be necessary if price pressures persist. Financial markets have sharply increased the likelihood of a December rate hike to nearly 48%, up significantly from just 14% a week prior, according to the CME FedWatch tool.
The Greenback also receives support from increased safe-haven demand amid ongoing geopolitical conflicts. The United States (US) and Iran remain far from an agreement to end weeks of fighting and reopen the critical Strait of Hormuz shipping route.
US President Donald Trump escalated tensions by publicly warning Iran to make progress or face new consequences. Because the Strait remains effectively closed, global oil prices are continuing to climb, which places a heavy economic burden on countries that rely heavily on energy imports. Global investor anxiety is heightened further by warnings from Chinese leader Xi Jinping to President Trump that Taiwan could trigger direct clashes between their two economies.
However, the downside of the EUR/USD pair could be restrained as the Euro (EUR) may gain ground amid hawkish sentiment surrounding the European Central Bank (ECB) policy outlook.
ECB policymakers hinted at an interest rate hike to tame sticky inflation expectations. A Reuters poll suggested that the 85% of economists indicated that the central bank would raise its deposit rate by 25 basis points (bps) to 2.25% in June, up from just over half expecting that before the April meeting.
Euro FAQs
The Euro is the currency for the 20 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.