GBP/USD Climbs Past 1.35 on Trade Optimism, Despite UK Debt Spike

Warren Takunda

Economic

Summary:

GBP/USD rose modestly to 1.3504 on Thursday as the US Dollar extended losses for a second day.

BUY GBPUSD

Close Time

CLOSED

1.35302

Entry Price

1.38000

1.34000

1.33707 -0.00148 -0.11%

17.0

Pips

Profit

1.34000

1.35472

Exit Price

1.35302

Entry Price

1.38000

The British Pound advanced cautiously against the US Dollar during Thursday’s North American session, rising for a second consecutive day despite growing fiscal pressures at home. Market sentiment tilted in favor of the Pound after the UK signed a trade deal with the United States, injecting a dose of optimism into a market otherwise jittery over deteriorating public finances and a still-hawkish Federal Reserve.

At the time of writing, the GBP/USD pair was trading around 1.3504, up 0.12% on the day, marking a fragile rebound from recent lows. While the Pound’s move higher appeared modest in percentage terms, the broader context highlights a meaningful shift in positioning — particularly as the US Dollar retreats for a second straight session, under pressure from improving global risk sentiment and a recalibration of interest rate expectations.

Sterling found support earlier in the week after the UK government signed a bilateral trade agreement with Washington. The deal was particularly well-received in London, coming at a time when the United States is embroiled in escalating trade tensions with its other major partners — namely, the European Union, Canada, and Mexico. According to letters issued from the White House, Washington intends to impose punitive tariffs ranging from 30% to 35% on a wide array of goods from these nations, effective August 1. The relative exclusion of the UK from this crossfire helped lift Sterling, at least in the short term.

However, the Pound’s bullish prospects remain clouded by the UK’s worsening fiscal outlook. Fresh figures released Thursday by the Office for National Statistics showed that public sector net borrowing soared to £20.7 billion in June — far exceeding the £17.1 billion forecast by the Office for Budget Responsibility. This marked one of the highest June borrowing totals in recent memory, reinforcing the view that the new Labour-led government may face mounting pressure to raise taxes to meet its fiscal repair goals.

With Chancellor Rachel Reeves set to present her Autumn budget in the coming months, speculation is already mounting over potential tax increases, particularly in areas such as capital gains, business income, or high-end real estate. While Reeves has so far attempted to strike a balance between growth-oriented investment and fiscal prudence, the latest data may force her hand sooner than expected.

Technical Analysis

Despite these concerns, the Pound continues to benefit from improving near-term sentiment and technical positioning. From a market structure perspective, GBP/USD has managed to break above the upper boundary of a bearish correctional channel that had constrained the pair throughout the prior weeks. This breakout has brought the currency back above the psychologically important 1.3500 handle, with the 50-day simple moving average (SMA) at 1.3514 now acting as the next key hurdle. A confirmed daily close above this level could open the door for a test of the 20-day SMA at 1.3568, followed by a challenge of the 1.3600 mark — an area that previously served as a pivot for bullish momentum.

That said, caution is warranted. The Relative Strength Index (RSI) has begun to flash early overbought warnings, suggesting the rally may be losing steam or at risk of stalling without a fresh catalyst. This hesitation, while not immediately bearish, hints that a pause or short-term pullback may be necessary before buyers attempt a more sustained push higher.

TRADE RECOMMENDATION

BUY GBPUSD

ENTRY PRICE: 1.3530

STOP LOSS: 1.3400

TAKE PROFIT: 1.3800

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The Euro climbed modestly against the U.S. Dollar on Tuesday, buoyed by a surprisingly upbeat ECB lending survey and a pullback in the Greenback amid mounting trade tensions

BUY EURUSD

Close Time

CLOSED

1.17000

Entry Price

1.19000

1.15000

1.17394 +0.00011 +0.01%

49.5

Pips

Profit

1.15000

1.17495

Exit Price

1.17000

Entry Price

1.19000

The Euro posted modest gains on Tuesday, gaining ground against the U.S. Dollar as traders digested supportive lending data from the European Central Bank and a fresh round of U.S. trade uncertainty pressured the Greenback. With the EUR/USD pair climbing back above the 1.1700 handle in early American trading hours, sentiment in the single currency was underpinned by signs of resilience in Eurozone credit conditions — and further fueled by the absence of any immediate progress in trade negotiations between Washington and Brussels.

At the time of writing, EUR/USD is holding near 1.1715, having broken above both Friday’s high of 1.1675 and the upper boundary of a descending channel traced from the July 1 highs. That breakout marks a significant short-term technical shift in favor of the Euro, with some traders now eyeing the 1.1785–1.1830 zone as the next major upside target — a region that previously acted as stiff resistance and saw sharp rejections in earlier months.

The latest push higher follows the release of the ECB’s quarterly Bank Lending Survey, which surprised markets with an optimistic tone. According to the report, credit standards in the Eurozone remained broadly unchanged in the second quarter despite elevated geopolitical noise and trade tensions. More notably, demand for both mortgage loans and corporate credit increased during the quarter, and banks expect that demand to rise further over the next three months. The upbeat lending data, combined with Monday’s positive report on access to finance among small and medium-sized enterprises, adds to growing evidence that the Eurozone’s real economy may be withstanding the current external pressures better than feared.

However, gains for the Euro remain tentative and somewhat constrained, with risk sentiment still fragile. Markets are watching trade developments closely as the self-imposed August 1 tariff deadline by the United States draws nearer with no breakthrough in negotiations. While technicals now favor the bulls, the broader macro picture is riddled with uncertainty. European and U.S. officials are continuing discussions to avoid a damaging escalation, but public statements from the European side have grown increasingly pessimistic. Several EU countries are reportedly weighing retaliatory measures, including potential anti-coercion legislation that would target U.S. services and digital exports in response to the Trump administration’s planned tariffs.

This deterioration in diplomatic tone is reinforcing caution among investors, especially those with exposure to Euro-linked assets. The looming threat of additional U.S. levies — particularly on auto exports, a sector critical to the Eurozone economy — remains a key risk factor capping the Euro’s upside.

Adding to the cautious mood is anticipation around a scheduled speech later today by Federal Reserve Chair Jerome Powell. Although Powell is not expected to comment directly on monetary policy — given the Fed’s blackout period ahead of its July 30 rate decision — investors will be listening closely for any subtle cues or reaction to growing political pressure from the White House. With President Trump increasingly vocal about his dissatisfaction with the Fed’s interest rate stance, Powell’s comments will be closely scrutinized for signs of institutional resistance or potential accommodation.

The Dollar, meanwhile, is showing signs of broader fatigue after last week’s stronger-than-expected U.S. data failed to halt its retreat. Uncertainty around trade and political interference has put a lid on further Greenback strength, at least for now. This backdrop is providing a narrow window for the Euro to extend its rally, though traders remain hesitant to chase the move aggressively without clearer signals from the Fed and trade negotiators.

Technical Analysis

On the technical front, EUR/USD is exhibiting signs of bullish momentum after breaching the descending correctional trend line that guided its pullback earlier in the month. The pair is now trading comfortably above its 50-period Exponential Moving Average (EMA50), suggesting a near-term shift in directional bias. Additionally, the RSI, which had previously signaled overbought conditions, has now reset and turned higher again — clearing the way for fresh buying interest. The next technical zone of interest lies between 1.17868 and 1.18299, where the market previously encountered heavy selling pressure and established a multi-week resistance ceiling.

While this price zone may attract profit-taking, a sustained break above it would further confirm the shift in sentiment and could open the path toward the 1.19 handle — particularly if U.S. data begins to soften or if Powell delivers a dovish tilt under mounting political pressure.

TRADE RECOMMENDATION

BUY EURUSD

ENTRY PRICE: 1.1700

STOP LOSS: 1.1500

TAKE PROFIT: 1.1900

Risk Warnings and Disclaimers

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Eva Chen

Central Bank

Forex

Summary:

Following the outcome of the Japanese House of Councillors election, the USDJPY has experienced a slight correction from the three-month high of 149.18 established last week. The exchange rate continues to face potential downward pressure as investors reassess the outlook for Japanese politics and policy.

SELL USDJPY

Close Time

CLOSED

146.734

Entry Price

143.930

148.900

155.814 +0.255 +0.16%

216.6

Pips

Loss

143.930

148.901

Exit Price

146.734

Entry Price

148.900

Fundamentals

During the European trading session on Tuesday, the USDJPY encountered selling pressure around the 147.55 level. The yen found some support amid rising uncertainty in Japanese politics, which amplified market concerns regarding future fiscal policy direction.

Although the market generally anticipates that the Japanese government may adopt a more expansionary fiscal policy, the funding source is likely to rely on tax surpluses in fiscal year 2024 rather than further government bond issuance, which helps mitigate the negative impact on the yen.

Regarding monetary policy, while the Bank of Japan (BOJ) is highly likely to maintain its interest rates unchanged at the July 31 policy meeting, the uncertainty surrounding future trade negotiations and policy adjustments has increased due to the ruling coalition losing its majority in the House of Councillors election. The BOJ may emphasize in its statement that there is still room for future rate hikes if the economy continues to improve.

Based on the current situation, the market expects the USDJPY to dip to 145.00 in the next three months, with the target remaining at 140.00 after 12 months.

Japanese Market Is Poised for a "Reassessment Week"_1

Technical Analysis

The USDJPY exhibits a bearish intraday bias, consolidating below 149.17. A near-term correction is favored. While downside risks persist, the intermediate-term uptrend remains intact as long as the 55-day SMA (currently at 145.91) holds.

A decisive break above 149.17 would validate further upside potential, with a technical target at 151.43. This level represents the 100% extension of the 139.87-148.64 rally and the 61.8% retracement of the 158.86-139.87 decline.

Trading Recommendations

Trading Direction: Sell

Entry Price: 147.50

Target Price: 143.93

Stop Loss: 148.90

Valid Until: August 6, 2025 23:55:00

Support: 147.00, 146.70, 146.19, 145.93

Resistance: 147.65, 148.00, 148.66, 149.00

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The U.S. Dollar extended its decline against the Canadian Dollar for a third straight session Tuesday, slipping toward 10-day lows near 1.3670. Tariff concerns,

SELL USDCAD

Close Time

CLOSED

1.36800

Entry Price

1.35600

1.37800

1.37700 0.00000 0.00%

100.0

Pips

Loss

1.35600

1.37800

Exit Price

1.36800

Entry Price

1.37800

The U.S. Dollar continued its downward drift against the Canadian Dollar on Tuesday, with the pair slipping toward 10-day lows near the 1.3670 mark as the Greenback endured its third consecutive session of declines. The selling pressure on the Dollar comes amid broad-based weakness fueled by intensifying concerns over trade policy, as markets brace for potentially disruptive tariff actions by the U.S. administration.

The move comes at a time when investor confidence in the U.S. outlook is being tested from multiple fronts — politically, economically, and technically. With just days remaining before the self-imposed August 1 trade deadline, President Donald Trump has yet to announce meaningful breakthroughs in trade negotiations with major partners, including the European Union and Japan. The absence of progress is weighing heavily on risk sentiment and casting doubt on the resilience of the American economy, should tariffs be enacted unilaterally.

Tuesday’s decline in the Dollar has less to do with hard data — the U.S. economic calendar is light — and more to do with the growing discomfort around the White House’s unpredictable trade policy. Investors are pricing in the increasing possibility that Trump may follow through with a new round of tariffs if his demands for concessions from key trading partners go unmet. Market sentiment has turned risk-averse, with equities showing signs of hesitation and Treasury yields holding near recent lows.

While trade-related headwinds are nothing new for the market, what’s becoming more damaging is the convergence of those concerns with an erosion in confidence surrounding the U.S. Federal Reserve. At the center of the latest political storm is Fed Chair Jerome Powell, who is scheduled to speak later in the day at an economic event in Washington. Though Powell is unlikely to discuss monetary policy directly due to the central bank’s blackout period ahead of its upcoming rate decision, the market will be watching closely for any indirect message on the Fed’s independence — especially amid continued pressure from the Trump administration.

Rumors of Powell’s possible dismissal — once dismissed as improbable — flared up again last week after President Trump publicly called for his resignation and questioned the legitimacy of the Fed’s renovation budget, even hinting at fraud. Although White House sources have since downplayed the likelihood of firing the Fed Chair, the narrative has left a mark on investor psychology.

The broader concern isn’t just about Powell himself, but the precedent such actions would set. A politically compromised central bank would severely undercut the Dollar’s role as the global reserve currency and could lead to repricing of risk assets across the board. While markets are not pricing in a Fed shake-up just yet, the credibility overhang is real — and it is now quietly contributing to Dollar weakness.

Against this backdrop, the Canadian Dollar has capitalized on the Dollar’s vulnerability, but its own upside potential appears constrained by softening crude oil prices. Canada’s economy is deeply tied to energy exports, and WTI crude is currently hovering near 1.5-month lows, weighed down by mounting concerns over global demand. With trade tensions threatening to restrict economic activity worldwide, oil’s recovery remains uncertain, and by extension, the Loonie’s recent strength may prove fragile.

Nevertheless, for now, USD/CAD is responding more to Dollar-specific flows than Canadian fundamentals. Unless oil prices stage a deeper correction, the Loonie could continue to attract interest from investors seeking alternatives to the Greenback during periods of geopolitical strain.

Technical Analysis

Technically, the USD/CAD pair remains under notable pressure. Price action has decisively broken below a key bullish correctional trendline on the short-term chart, signaling a potential trend shift. The Relative Strength Index has entered oversold territory, which has prompted a modest intraday bounce. However, this appears to be more of a technical correction than a change in direction.

We are eyeing the 1.3560 level as the next significant downside target, particularly if Dollar weakness accelerates. The pair’s inability to reclaim resistance around 1.3730 reinforces the view that momentum has shifted in favor of the bears, and any short-term rallies could be seen as opportunities to reload shorts rather than a true reversal.

As long as USD/CAD remains below the 50-day moving average and continues to generate lower highs on the hourly and daily charts, the path of least resistance remains to the downside. A clean break below 1.3670 would likely confirm the pair’s bearish trajectory, opening the door for further losses.

TRADE RECOMMENDATION

SELL USDCAD

ENTRY PRICE: 1.3680

STOP LOSS: 1.3780

TAKE PROFIT: 1.3560

Risk Warnings and Disclaimers

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Eva Chen

Economic

Commodity

Summary:

Since the beginning of the week, there has been a notable increase in gold trading activity, with prices decisively breaking through the narrow trading range that had been in place since early July. Various uncertainties have prompted investors to shift towards defensive assets, leading to a rise in gold prices.

SELL XAUUSD

Close Time

CLOSED

3400.09

Entry Price

3296.00

3430.00

4299.39 +20.10 +0.47%

299.1

Pips

Loss

3296.00

3430.12

Exit Price

3400.09

Entry Price

3430.00

Fundamentals

Despite a slight pullback on Tuesday, gold prices have largely maintained their position near a one-month high. Concerns regarding potential new U.S. tariffs on the EU, effective August 1st, triggered risk-averse sentiment, bolstering gold's upward trajectory on Monday. The ongoing uncertainty surrounding U.S.-EU trade negotiations continues to underpin demand for the precious metal.

Geopolitically, the EU's reduction of the price cap on Russian crude oil exports has amplified market anxieties regarding potential disruptions to global energy supplies and inflationary pressures. Furthermore, the domestic political landscape in Japan has intensified market unease. Declining political support for Prime Minister Shigeru Ishiba complicates the outlook for U.S.-Japan trade negotiations, further fueling safe-haven demand.

In summary, trade disputes, political instability, and inflation expectations are collectively driving capital inflows into the gold market, suggesting continued upside potential in the short term.

Triangle Consolidation Is Nearing Completion, with the Bulls Poised for an Upward Breakout_1

Technical Analysis

Following a failed attempt to decisively breach the US$3,400 level last week, gold prices initiated an upward movement this Monday. Despite the absence of consecutive gains since April, the price has consistently found support at the rising moving averages. Robust buying activity during multiple pullbacks has effectively countered the bearish momentum, indicating a stable bullish structure.

Currently, the price is approaching the apex of a large symmetrical triangle consolidation pattern. As the pattern nears completion, the market is anticipated to make a more definitive directional move. However, further consolidation may occur before a breakout. The initial test of the US$3,400 level at the beginning of the week was likely driven by institutional activity, and its sustainability remains uncertain.

The key support level is situated at the 5-day SMA of US$3,365. A breach of this level would weaken short-term upward momentum, potentially leading to a retest of the lower boundary of the triangle, approximately US$3,326 (near the 50-day SMA). A further breakdown could target the demand zone at US$3,296.

Trading Recommendations

Trading Direction: Sell

Entry Price: 3396

Target Price: 3296

Stop Loss: 3430

Valid Until: August 6, 2025 23:55:00

Support: 3383, 3365, 3338

Resistance: 3393, 3400, 3406

Risk Warnings and Disclaimers

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Tank

Forex

Economic

Summary:

The uncertainty surrounding trade policies, concerns over the Federal Reserve's independence, and dovish monetary policy signals continue to exert downward pressure on the US dollar. Today's focus is on Federal Reserve Chair Powell's speech, which, amidst ongoing tariff negotiations and political pressures, may offer crucial guidance on the central bank's policy trajectory.

BUY EURUSD

EXP

EXPIRED

1.16500

Entry Price

1.17100

1.16000

1.17394 +0.00011 +0.01%

Pips

EXPIRED

1.16000

1.17523

Exit Price

1.16500

Entry Price

1.17100

Fundamentals

As the threat of a 30% tariff on EU imports intensifies, the EU appears poised to deploy its "counter-coercion measures" - a so-called "nuclear option" aimed at deterring trade disputes. Ahead of Thursday's European Central Bank (ECB) meeting and potential U.S. tariff implementations, the euro is expected to remain stable. This week is critical for the euro, as markets brace for possible policy pauses by the ECB and the trade risks posed by imminent U.S. tariffs. Due to export uncertainties, weak domestic data, and cautious signals from central banks, the euro continues to fluctuate within a narrow range.

Trade policy uncertainties, concerns over the Federal Reserve's independence, and dovish monetary policy signals continue to weigh on the U.S. dollar. Today's focus is on Federal Reserve Chair Powell's speech, which, amid ongoing tariff negotiations and political pressures, could provide vital guidance on the central bank's policy trajectory. In the short term, the dollar appears temporarily oversold and may experience a slight rebound, especially if the Fed adopts a more hawkish tone or U.S. economic data unexpectedly improve. However, broad policy and trade uncertainties, along with risks surrounding the Fed leadership, warrant a cautious outlook. Overall, the EURUSD is likely to maintain a sideways upward trend.

Technical Analysis

The EURUSD has successfully broken through the consolidation zone in the 15-minute timeframe, accompanied by a bullish MACD crossover and increasing bullish momentum bars. The RSI remains in the mid-range, and the formation of a large bullish candlestick indicates strong short-term upward momentum. There is a high probability of further upward movement toward the previous resistance level at 1.171. In the 1M timeframe, the price has broken above the descending trendline, with the MACD histogram bars gradually diminishing, and no new lows being formed, signaling a bullish divergence. Both short-term and medium-term trends are upward, suggesting a strategy of going long at the lows.

Will the EU Retaliate? How Should We Navigate the Coexistence of Risks and Opportunities?_1

Will the EU Retaliate? How Should We Navigate the Coexistence of Risks and Opportunities?_2

Trading Recommendations

Trading Direction: Buy

Entry Price: 1.165

Target Price: 1.171

Stop Loss: 1.16

Support: 1.166, 1.164, 1.16

Resistance: 1.171, 1.184, 1.2

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

Both the IEA and OPEC have downgraded their forecasts for oil demand growth this year. Meanwhile, OPEC plans to increase production again in August, which may lead to a continued decline in oil prices.

SELL WTI

Close Time

CLOSED

65.118

Entry Price

60.700

66.500

57.233 -0.408 -0.71%

138.2

Pips

Loss

60.700

66.531

Exit Price

65.118

Entry Price

66.500

Fundamentals

Currently, the global crude oil demand outlook remains under pressure due to the "cautiously optimistic" expectations. Both the International Energy Agency (IEA) and OPEC have downgraded their forecasts for oil demand growth this year. The IEA expects demand to grow by only 700,000 b/d in 2025, the lowest increase since 2009. However, imports in the Asia-Pacific region, especially in China and India, were strong in the first half of the year, with a YoY increase of 510,000 b/d, indicating that the impetus for inventory replenishment and consumption remains considerable in a low-oil-price environment.

In the US, the EIA data last week showed an unexpected and significant drawdown of 3.859 million barrels in crude oil inventories, far exceeding the market expectation of 552,000 barrels, which proves the strong demand for gasoline during the summer driving season. However, the OPEC+ meeting decided to increase production by 548,000 b/d in August, exceeding previous expectations, which intensified the supply pressure and had a slightly bearish impact on oil prices.

Coupled with geopolitical factors, although the US has maintained the intensity of sanctions against Iran recently, there has been no escalation. The easing of geopolitical factors has weakened the support for crude oil prices.

Technical Analysis

From the 4-hour chart, WTI crude oil has been continuously constrained by the MA144 recently. As the high points of the K-line gradually decline, the possibility of a short-term downward trend is gradually accumulating. At the same time, the MA10 has crossed below the MA20, showing a death-cross trend, indicating that short-term bears are in the dominant position.

Meanwhile, the moving average system is in a bearish arrangement, further increasing the possibility that the short-term trend will remain downward.

It is recommended that traders mainly adopt a strategy of shorting at high prices.