The British pound continues to roll and is up for a sixth straight day. GBP/USD is trading at 1.3038 in the European session, up 0.51% on the day. The pound has sparkled in July, climbing 3% and hitting its highest level since July 2023.
UK inflation unchanged
UK consumer inflation remained at 2% y/y in July, unchanged from June. This was higher than the market estimate of 1.9% but it’s hard to complain when inflation is at the BoE’s 2% target for two months running. Monthly, inflation dipped to 0.1%, down from 0.3% a month earlier, and matching the market estimate. Core inflation rose 3.5% y/y, unchanged from June and matching the market estimate. Monthly, core inflation dropped from 0.5% to 0.2%, below the market estimate of 0.1%.
The inflation report was positive and the pound responded by extending its impressive July rally. The fly in the ointment was services inflation, which the Bank of England watches keenly for signs of domestic inflationary pressure. Services inflation has been an outlier and was unchanged at 5.7% in July.
How will the BoE view the inflation report? Overall the release was positive, but services inflation is almost three times higher than the 2% target, which is a concern for policy makers. The cash rate is currently at 5.25%, unchanged since August 2023 when inflation was 7.9%. There is pressure on the BoE to provide relief and hit the rate-cut trigger but the central bank may lack the confidence to make a move at the next meeting on August 1.
The remainder of the week will be busy, with the UK releasing the employment report on Thursday and retail sales on Friday.
GBP/USD technical
-
GBP/USD is testing resistance at 1.3008. Above, there is resistance at 1.3051.
-
1.2987 and 1.2944 are the next support levels.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD stays below 1.1700 on persistent USD strength
EUR/USD struggles to gain traction and trades below 1.1700 on Friday. The pair is weighed by fading EU-US trade deal hopes as US President Trump is set to send a tariff letter to the European Union later in the day. Sustained haven demand for the US Dollar adds to EUR/USD's downside.
Meme coins to watch as Bitcoin hits record high
Meme coins Bonk, Dogwifhat, and Floki are positioned to extend gains as the weekly recovery reaches crucial resistance levels. The meme coins gain bullish momentum on the back of Bitcoin’s (BTC) recovery run, hitting a new all-time high on Thursday.
Gold advances to $3,350 area on risk aversion
Gold gathers bullish momentum and trades near $3,350 in the second half of the day on Friday. The precious metal capitalizes on safe-haven demand as markets remain risk-averse amid the growing uncertainty surrounding the US trade regime and its potential impact on the economic outlook.
GBP/USD drops to multi-week lows near 1.3500
GBP/USD extends its daily slide and trades at its lowest level in nearly three weeks at around 1.3500. The disappointing GDP data from the UK weighs on Pound Sterling, while the US Dollar continues to benefit from safe-haven flows, forcing the pair to stretch lower.
Calm before the decision: Dow Jones regains momentum amid Trump’s tariff escalation and Fed silence
The Dow Jones Industrial Average began regaining its footing by the end of the week, having stumbled earlier under the weight of fresh tariff threats that pushed markets back into a cautious stance. But as has often been the case in the Trump era, threats are one thing—implementation is another.
Best Brokers for EUR/USD Trading
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.