EUR/USD remains well on the defensive, extending its weekly leg lower to the 1.1620-1.1615 band on Friday, or new five-week troughs. Meanwhile, the pair continues to suffer the broad-based strength of the Greenback and a cautious market mood, as firm inflation data reinforces expectations of a tighter Fed policy stance in the next few months.
Gold sinks 2% as Iran war fuels fresh inflation shock
Gold price retreats by over 2.30% on Friday amid fears that prolonged hostilities between the US and Iran could trigger a second wave of inflation, forcing central banks to hike interest rates. The XAU/USD trades at $4,551 after bottoming at around $4,511.
XAU/USD slides as yields surge and Fed cuts vanish
US Treasury yields are soaring, with the 10-year T-note coupon hitting yearly highs at 4.591%, up 10 basis points and poised to challenge the 2025 high of 4.627%. The Greenback has followed suit, as shown by the US Dollar Index (DXY), which tracks the performance of the American currency against the other six, up 0.33% to 99.19.
Overnight news of US President Donald Trump revealing that he’s losing patience with Iran pushed Oil prices higher, amid speculation of a resumption of hostilities. US inflation data released on Tuesday and Wednesday had erased the chances of the Federal Reserve (Fed) easing, a headwind for Bullion, which fares well in low interest rate environments.
The Fed, under Kevin Warsh’s first meeting as the new Chair, is expected to hold rates unchanged in June and through the end of the year, according to Prime Terminal data.
Several Fed policymakers stressed this week that containing inflation remains a priority, with some leaving open the possibility of further rate hikes if price pressures persist.
US data showed Industrial Production rose 0.7% MoM in April, beating forecasts of 0.3% and rebounding from March’s 0.3% decline.
Next week, US traders are now awaiting housing and labor market data, as well as remarks from Fed officials.
XAU/USD technical outlook: Gold set to trade sideways, but bears loom
From a technical standpoint, Gold is poised to consolidate around $ 4,500–$4,650 in the short term after clearing key Simple Moving Averages (SMAs) during the week. Momentum is clearly bearish as depicted by the Relative Strength Index (RSI), falling toward oversold territory after diving beneath the 50-neutral level two days ago.
If XAU/USD clears the next area of interest being the May 4 daily low of $4,500, this opens the door for further losses. Downwards, the next support would be the March 26 daily low of $4,351, before challenging the 200-day SMA at $4,322.
On the upside, if Gold regains control above $4,600, the next resistance is the 20-day SMA at $4,662, ahead of the psychological $4,700. The next area of interest is the 50 and 100-day SMAs at $4,729 and $4,785, respectively. Up next is the $4,800 milestone.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
US Dollar: Hawkish Fed repricing drives breakout – ING
ING’s Francesco Pesole notes the US Dollar (USD) is gaining strong short-term momentum as hotter US data reinforce expectations for a Federal Reserve (Fed) hike. With US Dollar Index (DXY) breaking above late April highs and no progress on Gulf tensions, they see risks of further Dollar strength, contingent on incoming headlines from Beijing and developments in Oil and equities.
DXY breaks higher on Fed repricing
“The dollar seems to be gaining some serious short-term momentum. We had speculated yesterday that the Trump-Xi meeting could have yielded some positive headlines (perhaps also on Iran) that would have capped USD and lifted sentiment. It’s been too little so far, and a turn lower in equity futures today alongside another leg higher in oil prices is allowing the dollar to benefit from the latest hawkish data and the resulting repricing higher in Fed hike bets.”
“Overall, there is little evidence so far that higher fuel costs are curbing broader consumer spending, supporting a narrative of a resilient US economy rather than an increasingly negative impact on RoW activity from higher energy prices.”
“We have suddenly broken above the late April highs in DXY, and it’s still dangerous to call for a peak in the dollar, considering the lack of any progress in the Gulf. Risks are of a move to 100 unless some positive headlines start flowing in.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Japanese Yen: Interventions need rate backing – Commerzbank
Commerzbank’s Michael Pfister argues that Japanese authorities cannot rely on FX interventions alone to support the Japanese Yen (JPY) against the US Dollar (USD). He notes that past intervention episodes delivered mixed results and July 2024’s relative success coincided with a Bank of Japan (BoJ) rate hike. Pfister expects two further BoJ hikes and forecasts USD/JPY to decline over 2026, but warns that failure to tighten would keep the Yen under pressure.
BoJ hikes seen key to yen support
“In recent months, there has been a sense that levels above 160 in USD/JPY mark the critical threshold for actual interventions, although, of course, warnings of intervention by the MoF grow increasingly vocal even before USD/JPY reaches that level.”
“The major success in July 2024 was due to a different factor.”
“At the end of July, the Bank of Japan implemented its second interest rate hike, providing additional support for the interventions through monetary policy.”
“In short, interventions alone won’t save the yen.”
“For the interventions to be successful, the BoJ would therefore need to hike interest rates further.”
“Our expectation of two further interest rate hikes is also the reason why we continue to expect USD-JPY levels to fall over the course of the year, even after our latest forecast revision.”
“However, if the BoJ fails to deliver these, the outlook for the yen is likely to remain challenging.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Asia stocks fall before Trump-Xi talks; South Korea’s Kospi slumps from record high
Most Asian stocks fell on Friday, shrugging off the overnight rally on Wall Street led by hopes for improving relations between the US and China – the world’s two biggest economies. Investors, however, remain on edge amid high-stakes talks between US President Donald Trump and Chinese President Xi Jinping in Beijing.
Meanwhile, Chinese markets steadied near multi-year highs as markets sought more details on reports of the US allowing more chip sales to China. In contrast, South Korea’s KOSPI is by far the worst performer, retreating sharply from a fresh record high after a US trade official said U.S. chip export controls were not discussed in detail during recent talks. This comes on top of amid concerns of concentration risks, particularly in artificial intelligence stocks, leading to heavy losses in major chipmaking stocks and South Korean markets.
Furthermore, a finance ministry report said that the South Korean government saw continued downside risks to the economy amid the Middle East tensions. In fact, the Ministry of Economy and Finance said in its monthly report, called Green Book, that the Asian economy recently faced lingering downward risks stemming from the Iran war despite the continued recovery trend shown in the significantly expanding first-quarter growth.
On the geopolitical front, Trump said in an interview aired on Thursday night on Fox News that he would not be much more patient with Iran and urged Tehran to reach a deal. Further, a commercial vessel was reportedly seized by Iranian personnel off the United Arab Emirates (UAE), stoking concerns over the flow of energy supplies through the critical Strait of Hormuz. This turns out to be another factor weighing on investors’ sentiment and contributing to a generally weaker tone across the Asian equity markets on Friday.
The market focus remains squarely on the incoming headlines from the second day of talks between Trump and Xi. Apart from this, developments surrounding the Middle East crisis might continue to infuse some volatility in the financial markets and contribute to producing short-term trading opportunities heading into the weekend.
AI stocks FAQs
First and foremost, artificial intelligence is an academic discipline that seeks to recreate the cognitive functions, logical understanding, perceptions and pattern recognition of humans in machines. Often abbreviated as AI, artificial intelligence has a number of sub-fields including artificial neural networks, machine learning or predictive analytics, symbolic reasoning, deep learning, natural language processing, speech recognition, image recognition and expert systems. The end goal of the entire field is the creation of artificial general intelligence or AGI. This means producing a machine that can solve arbitrary problems that it has not been trained to solve.
There are a number of different use cases for artificial intelligence. The most well-known of them are generative AI platforms that use training on large language models (LLMs) to answer text-based queries. These include ChatGPT and Google’s Bard platform. Midjourney is a program that generates original images based on user-created text. Other forms of AI utilize probabilistic techniques to determine a quality or perception of an entity, like Upstart’s lending platform, which uses an AI-enhanced credit rating system to determine credit worthiness of applicants by scouring the internet for data related to their career, wealth profile and relationships. Other types of AI use large databases from scientific studies to generate new ideas for possible pharmaceuticals to be tested in laboratories. YouTube, Spotify, Facebook and other content aggregators use AI applications to suggest personalized content to users by collecting and organizing data on their viewing habits.
Nvidia (NVDA) is a semiconductor company that builds both the AI-focused computer chips and some of the platforms that AI engineers use to build their applications. Many proponents view Nvidia as the pick-and-shovel play for the AI revolution since it builds the tools needed to carry out further applications of artificial intelligence. Palantir Technologies (PLTR) is a “big data” analytics company. It has large contracts with the US intelligence community, which uses its Gotham platform to sift through data and determine intelligence leads and inform on pattern recognition. Its Foundry product is used by major corporations to track employee and customer data for use in predictive analytics and discovering anomalies. Microsoft (MSFT) has a large stake in ChatGPT creator OpenAI, the latter of which has not gone public. Microsoft has integrated OpenAI’s technology with its Bing search engine.
Following the introduction of ChatGPT to the general public in late 2022, many stocks associated with AI began to rally. Nvidia for instance advanced well over 200% in the six months following the release. Immediately, pundits on Wall Street began to wonder whether the market was being consumed by another tech bubble. Famous investor Stanley Druckenmiller, who has held major investments in both Palantir and Nvidia, said that bubbles never last just six months. He said that if the excitement over AI did become a bubble, then the extreme valuations would last at least two and a half years or long like the DotCom bubble in the late 1990s. At the midpoint of 2023, the best guess is that the market is not in a bubble, at least for now. Yes, Nvidia traded at 27 times forward sales at that time, but analysts were predicting extremely high revenue growth for years to come. At the height of the DotCom bubble, the NASDAQ 100 traded for 60 times earnings, but in mid-2023 the index traded at 25 times earnings.
Euro weakens to near 1.1650 as hot US inflation boosts Fed hike expectations
The EUR/USD pair trades in negative territory near 1.1660 during the early Asian session on Friday. The US Dollar (USD) edges higher against the Euro (EUR) as surging US inflation, linked to Middle East tensions, reinforces expectations that the US Federal Reserve (Fed) will keep interest rates higher for longer or potentially hike them.
US economic data released this week showed US Producer Price Index (PPI) inflation accelerated to the fastest pace since 2022 in April, while the Consumer Price Index (CPI) rose the most since 2023. Hotter-than-expected US inflation data have reinforced a “higher-for-longer” US interest rate outlook, supporting the Greenback and acting as a headwind for the major pair.
Markets are now pricing in nearly a 36.9% chance that the US central bank will raise the interest rate by at least 25 basis points (bps) at the December meeting, up from 22.5% a week ago, according to the CME FedWatch tool.
Nonetheless, positive developments surrounding the meeting between US President Donald Trump and Chinese President Xi Jinping in Beijing could lift a riskier asset, such as the shared currency.
Trump said on Thursday that he hoped the relationship between the US and China would be “stronger and better than ever before,” adding that Xi offered help to resolve the conflict and pledged not to provide military equipment to Iran. Xi also wants to see the critical Strait of Hormuz reopened.
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.
Gold slides as strong USD, US-China summit dent haven demand
Gold (XAU/USD) retreats by some 0.25% during the North American session on Thursday as tensions in the Middle East remain high, while the US-China summit is underway, with President Donald Trump meeting Chinese President Xi Jinping. At the time of writing, the XAU/USD pair trades at $4,678.
XAU/USD falls as resilient US data boosts Dollar demand
Negotiations between the US and Iran have stalled, failing to provide relief for investors, yet US equities have pushed towards new all-time highs, as risk appetite improved. In the meantime, discussions between Presidents Trump and Xi began, with the former saying that Beijing agreed to buy 200 Boeing jets, while clearing sales of NVIDIA H200 chips to 10 Chinese firms.
The Chinese President, warned Trump that disagreements over Taiwan could push relations to “a very dangerous place” as the two began the two-day summit. Xi told Trump that negotiations between the US and Chinese trade teams in South Korea reached “balanced and positive outcomes.”
Economic data in the US showed that Retail Sales rose 0.5% MoM in April, matching forecasts but below March’s 1.6% reading. On an annual basis, sales increased 4.9%, beating expectations for 3.3% growth. At the same time, Initial Jobless Claims for the week ending May 9 came in at 211K, above the 205K forecast.
After the data, bullion extended its losses as the Greenback printed another leg higher, as American consumers remained resilient despite paying high gasoline prices at the pump.
The US Dollar Index (DXY), which tracks the buck’s value against a basket of six currencies, is up 0.38% at 98.82, refreshing two-week highs with investors setting their sights on the 100.00 barrier.
Another factor weighing on Gold is the latest US inflation data, which reflected the energy shock: the Producer Price Index (PPI) rose 6% YoY, and the Consumer Price Index (CPI) reached 3.8%, moving further away from the Federal Reserve’s 2% target.
Investors turned skeptical that the Federal Reserve will cut rates in 2026. Data from Prime Terminal shows that money markets expect the Fed to hold rates unchanged at the next meeting, the first under the new Fed Chair, Kevin Warsh.
Earlier, Kansas City Fed’s Jeffrey Schmid stated that “inflation is the most pressing risk to the US economy.” He added that the economy “has shown remarkable resilience” and that the job market is “functioning effectively.”
Cleveland Fed Beth Hammack commented that central bank independence “is important in achieving our dual mandate goals of maximum employment and price stability.” She added that it allows policymakers to make decisions based “on incoming data and the evolving outlook.”
Ahead in the week, traders will eye the release of the New York Fed Empire State Manufacturing Index and speeches by Federal Reserve officials.
XAU/USD technical outlook: Gold consolidates within $4,650-$4,700
Gold continues to struggle to decisively break the $4,700 milestone, as bullish momentum fades and sellers seem to gain traction. The Relative Strength Index (RSI) shifted bearishly, indicating further downside lies ahead.
For a bearish continuation, sellers must clear $4,650. Once hurdled, the next area of interest would be the $4,600 mark before diving to the May 4 daily low of $4,500.
On the other hand, if bulls reclaim the $4,700, this could pave the way to challenge the 50- and 100-day Simple Moving Averages (SMAs) at $4,740 and $4,783, respectively. Once surpassed, the next stop would be $4,800.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
XRP holds key support as MVRV suggests undervaluation
Ripple (XRP) is struggling to hold above $1.42 short-term support at the time of writing on Thursday, down roughly 5% from the monthly peak around $1.51. The remittance token’s recovery appears lock-step, as risk-off sentiment and softening institutional demand weigh.
Why XRP could be undervalued
The XRP on-chain Z-Score metric extended its decline to 0.04 on Wednesday, remaining below the token’s realized value. According to Glassnode, the Market Value Realized Value (MVRV) Z-Score evaluates whether XRP is overvalued or undervalued relative to its “fair value.”
When XRP’s market value, calculated by multiplying the spot price by supply, is lower than the realized value, measured by cumulative capital inflows into the asset, it signals a local market bottom.
On the other hand, a market value above the realized value often signals a local market top. The chart below shows the MVRV Z-Score holding persistently slightly above the XRP fair value since early February, suggesting possible undervaluation and a likely local bottom.
Still, XRP lacks the tailwind to trigger a reversal, despite being undervalued, especially amid faltering demand for spot Exchange-Traded Funds (ETFs). Institutional activity remained muted on Wednesday, with US-listed ETFs not recording any flows. SoSoValue data shows cumulative inflows steady at $1.36 billion, while net assets declined slightly to $1.14 billion, from $1.16 billion the previous day.
Technical analysis: XRP stages fresh recovery bid
XRP trades above $1.42, holding between major Exponential Moving Averages (EMAs), the 50-day EMA at $1.42 and the 100-day EMA at $1.49, leaving the near-term bias broadly neutral. The 200-day EMA, higher up at $1.70, continues to frame the broader bearish structure.
The Relative Strength Index (RSI) around 53 on the daily chart and a slightly positive Moving Average Convergence Divergence (MACD) histogram hint at modest, but not decisive, bullish momentum as price consolidates near the current range.
On the topside, immediate resistance lies at $1.45, followed by the 100-day EMA around $1.49 and the downward resistance trendline near $1.50. Moreover, the 200-day EMA at $1.70 serves as a more distant cap if buyers extend the recovery. On the downside, initial support lies at the 50-day EMA around $1.42, reinforced by the latest Parabolic SAR print at $1.40. A sustained break below these levels would expose the pair to deeper corrective pressure despite the current neutral tone.
(The technical analysis of this story was written with the help of an AI tool.)
Ripple FAQs
WTI Oil uncertain after Trump-Xi talks as IEA warns of persistent supply deficit
West Texas Intermediate (WTI) trades around $97.30 at the time of writing on Thursday, up 0.34%, in a trading day marked by elevated volatility. The US Crude Oil benchmark initially fell to as low as $95.50 following the market’s first reaction to discussions between US President Donald Trump and Chinese President Xi Jinping, before erasing losses and returning to positive territory.
The price reversal comes after White House officials described the meeting between the US and Chinese presidents as “good”, highlighting discussions aimed at strengthening economic cooperation. Both leaders also agreed that the Strait of Hormuz should remain open, a particularly sensitive issue for Oil markets given the strategic importance of the passage for global Oil trade.
The comments reduced part of the geopolitical risk premium that had been built into energy prices in recent weeks. Markets were closely watching discussions regarding Iran, with Donald Trump expected to encourage Beijing to push Tehran toward a peace agreement and the full reopening of the Strait of Hormuz.
Donald Trump also stated that he had held “extremely positive and constructive” discussions with Xi Jinping, while announcing that he had invited the Chinese leader to the White House on September 24. Meanwhile, Xi stressed the importance of stable relations between both countries, stating that China and the United States (US) should become partners rather than rivals.
However, global supply prospects continue to provide underlying support to Oil prices. The International Energy Agency (IEA) said on Wednesday that global Oil supply is expected to remain below demand this year due to disruptions caused by the Iran war in the Middle East. The agency now forecasts a decline in global supply of around 3.9 million barrels per day this year, a significant revision from its previous estimate.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
UK Preliminary GDP grows by 0.6% QoQ in Q1 2026, as expected
The UK economy expanded at a quarterly rate of 0.6% in the three months to March 2026, following a 0.1% growth in the fourth quarter of 2025 (Q4).
The data beat the market forecast of 0.6% in the reported period.
The UK GDP rose 1.1% year-over-year (YoY) in Q1 2026 vs. 0.8% expected and a 1.0% growth in Q4.
The monthly UK GDP arrived at 0.3% in March, compared to 0.4% in February (revised from 0.5%), above the market consensus of a 0.2% decline.
Other data from the UK showed that Industrial Production declined 0.2% over the month in March, while the Manufacturing Production jumped 1.2% during the same period. Both readings came in better than market expectations.
Market reaction to the UK data
The upbeat UK GDP data fails to boost the British Pound. At the press time, the GBP/USD pair is down 0.01% on the day to trade at 1.3520.
Pound Sterling Price Today
The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.02% | 0.02% | 0.02% | 0.01% | 0.02% | 0.00% | -0.03% | |
| EUR | -0.02% | -0.02% | -0.04% | -0.02% | -0.05% | -0.05% | -0.05% | |
| GBP | -0.02% | 0.02% | 0.00% | -0.01% | -0.01% | -0.03% | -0.00% | |
| JPY | -0.02% | 0.04% | 0.00% | -0.01% | 0.00% | -0.02% | -0.05% | |
| CAD | -0.01% | 0.02% | 0.01% | 0.00% | 0.02% | -0.02% | 0.01% | |
| AUD | -0.02% | 0.05% | 0.00% | -0.00% | -0.02% | -0.01% | 0.02% | |
| NZD | -0.01% | 0.05% | 0.03% | 0.02% | 0.02% | 0.01% | 0.02% | |
| CHF | 0.03% | 0.05% | 0.00% | 0.05% | -0.01% | -0.02% | -0.02% |
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).
This section below was published at 05:15 GMT on Thursday as a preview of the UK GDP data
- The United Kingdom’s Gross Domestic Product is expected to have accelerated in Q1.
- The GDP is forecast to contract in March, which might raise concerns at the Bank of England.
- A weak economic outlook amid the war in Iran and growing political turmoil in the UK might hurt the Pound Sterling.
The United Kingdom’s (UK) Office for National Statistics will release the preliminary estimate of the first quarter’s Gross Domestic Product (GDP) report on Thursday. Market analysts have anticipated a 0.6% growth in the three months to March, after a meager 0.1% advance in the last quarter of 2025.
Quarterly GDP data, however, will be released alongside an array of UK indicators for March, which are expected to show less inspiring figures. The monthly GDP is foreseen contracting by 0.2%, with Manufacturing and Industrial Production falling, amid the war in Iran. If these figures are confirmed, the outlook of a softening economic activity with soaring inflationary pressures might pose a headache for the Bank of England (BoE). This, coupled with the increasing political uncertainty, might unleash a perfect storm for the British Pound (GBP).
UK Gross Domestic Product forecast: What numbers could tell us
The UK economy is expected to show a significant advance in the first quarter of the year, with GDP growth accelerating to 0.6% from 0.1% in the previous quarter. These numbers, however, need to be taken with caution, as the war in Iran seems to have brought economic growth to an abrupt halt at the end of the quarter.
The monthly Gross Domestic Product, which will be released at the same time on Thursday, is expected to show a 0.2% contraction in March, in what would be the worst reading in almost a year. Manufacturing Production is seen extending its decline with a 0.2% contraction in March following a 0.1% drop in February, while Industrial Production is expected to have shrunk at a 0.4% pace in March, after growing 0.5% in February, all in all confirming that the war in Iran and the energy shock stemming from it have crushed economic activity.
The Bank of England (BoE) left its Bank Rate unchanged at 3.75% after its April 30 monetary policy meeting, with one policymaker voting for a quarter-point rate hike, which left hopes of some monetary tightening alive. UK inflation surged to a 3.3% year-on-year level in March, adding pressure on the central bank to adopt a more restrictive policy. Thursday’s figures, however, might bring concerns about recession back to the table and put BoE policymakers on edge.
Beyond that, the local elections held on May 7 brought a sharp reversal for the Labour Party, cutting the ground from under Prime Minister Keir Starmer’s feet. Voices calling for resignation are mounting, increasing the risk of a void of power that might bring back concerns about fiscal slippage and send the GBP into a tailspin.
When will the UK release Q1 GDP, and how could it affect GBP/USD?
The UK will release the preliminary estimate of Q1 Gross Domestic Product (GDP) on Thursday at 06:00 GMT. The quarterly reading is expected to show upbeat figures, but looking in detail, additional data might show that economic activity plummeted after the start of Iran’s war.
The Pound has been losing ground this week, weighed by a growingly uncertain political scenario in the UK, with the position of Prime Minister Keir Starmer in the pillory. Against this background, the risk is of a negative surprise at Thursday’s data, especially in figures from March, as they will heighten concerns about the economic outlook if the Middle East conflict does not come to a swift end, which right now does not seem to be the case.
Guillermo Alcalá, FX Analyst at FXStreet, says: “GBP/USD is heading south after failure to break the resistance area around 1.3650. The pair remains contained within the last few weeks’ trading range, but the risk has shifted to the downside, with bears eyeing the bottom of the channel at around 1.3450. A confirmation below this level would bring the April 8 and 10 highs, at the 1.3480 area, into focus.”
“On the upside, an unlikely break of the 1.3650-1.3660 area, which has capped the pair several times in May, would clear the path towards the February highs between 1.3710 and 1.3730, ahead of the 2026 peak, at 1.3869, says Alcalá.”
GDP FAQs
A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022.
Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.
A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency.
When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.
When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.