Sterling slips with economic data, tariff uncertainty in focus

Forex

Summary:

Sterling fell amid tariff uncertainty and key UK data releases. Investors await GDP figures and rate guidance, while trade deal progress with the U.S. and domestic reforms shape market sentiment.

Sterling slipped on Monday in a lacklustre start to a week packed with economic data reports that could offer clues to the interest rate outlook, while globally investors watched the latest deadline on U.S. tariffs.

Sterling slipped 0.3% and last fetched $1.3601 against the U.S. dollar , while the pound was broadly unchanged against the euro at 86.23 pence.

Last week saw investors in UK assets rattled by ambiguities around the health of public finances, as a number of U-turns by the governing Labour Party over welfare reforms sparked speculation around the future of finance minister Rachel Reeves.

Traders are now shifting their focus to a set of data this week, with Monday bringing a report that showed British house prices stagnated month-on-month during June as expected, after an increase in tax on property transactions took effect in April.

However, "the post April dip is likely to fizzle out", said Victoria Scholar, head of investment at interactive investor. "Plus, mortgage lending is improving, thanks to four rate cuts from the Bank of England over the last year and two more priced in this year."

Later in the week, traders will scrutinize a report on gross domestic product that could offer clarity on the health of the UK economy and determine the outlook on interest rates.

Bank of England policymaker Alan Taylor said late on Friday that he thought it would be better to cut interest rates now rather than wait and risk needing to cut them in a hurry.

Taylor expects the Bank Rate to fall to "around 3%" by the end of next year. Traders largely anticipate the next 25 basis points interest rate cut by the central bank will be in September, according to data compiled by LSEG.

Meanwhile, investors globally were awaiting a Wednesday deadline ahead of which economies scrambled to strike trade deals with the U.S. to avoid sharply higher duties on their exports to the United States.

Britain was the first to secure an agreement with the U.S. in May and has avoided the additional tariffs on steel and aluminium. Negotiations are ongoing to remove existing 25% duties on industrial metals altogether.

The pound has appreciated about 2% since the deal with the U.S. and is trading close to its highest level since late 2021, also benefiting from a broader dollar weakness.

Separately, a Deloitte survey showed British business executives now see greater opportunities closer to home, while the attractiveness of the United States as an investment destination dwindled.

In other news, Reeves is expected to announce a 28.6 million pound ($39 million) investment by the National Wealth Fund in a carbon capture project that could create jobs in central and northern England, as the government strives to shore up public support.

Source:reuters

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Michelle

Economic

Forex

The European Union still aims to reach a trade deal with the United States by July 9 after Commission President Ursula von der Leyen and U.S. President Donald Trump had a "good exchange", a Commission spokesperson said on Monday.

It was not immediately clear, however, whether there had been a meaningful breakthrough in talks to stave off the imposition of sweepingtariff hikeson the United States' largest trading partner.

The clock is ticking down on a deadline for countries around the world to conclude deals with the U.S. after Trump unleashed a global trade war that has roiled financial markets and sent policymakers scrambling to protect their economies.

TRUMP TOUTS TARIFF PROGRESS

As he keeps much of the world guessing, Trump on Sunday said the U.S. was close to finalising several trade pacts in coming days and would notify other countries by July 9 of higher tariff rates. He said they would not take effect until August 1, a three-week reprieve.

He also put members of the developing nations' BRICS group in his sights as its leaders met in Brazil, threatening an additional 10% tariff on any countries aligning themselves with the "anti-American" policies.

The BRICS group comprises Brazil, Russia, India and China and South Africa along with recent joiners Egypt, Ethiopia, Indonesia, Iran, and the United Arab Emirates.

The EU has been torn over whether to push for a quick and light trade deal or back its own economic clout in trying to negotiate a better outcome. It had already dropped hopes for a comprehensive trade agreement before the July deadline.

"We want to reach a deal with the U.S. We want to avoid tariffs," the spokesperson told reporters at a daily briefing. "We want to achieve win-win outcomes, not lose-lose outcomes."

IN TRADE DEALS, 'TIME IS MONEY'

Without a preliminary agreement, broad U.S. tariffs on most imports would rise from their current 10% to the rates set out by Trump on April 2. In the EU's case that would be 20%.

Von der Leyen also held talks with the leaders of Germany, France and Italy at the weekend, Germany said. German Chancellor Friedrich Merz has repeatedly stressed the need for a quick deal to protect industries vulnerable to tariffs ranging from cars to pharmaceuticals.

"Time is money in the truest sense of the word," the German spokesperson told reporters in Berlin.

"In this respect, we should give ourselves another 24 or 48 hours to come to a decision."

Russia said the BRICS group had never tried to undermine other countries.

"It is very important to note here that the uniqueness of a group like BRICS is that it is a group of countries that share common approaches and a common world view on how to cooperate, based on their own interests," said Kremlin spokesman Dmitry Peskov.

"And this cooperation within BRICS has never been and will never be directed against any third countries."

Source: TradingView

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Warren Takunda

Economic

London stocks had popped into the black by midday on Monday but gains were muted as investors mulled the latest twists and turns in the Trump tariff saga.

The FTSE 100 was up 0.1% at 8,829.12, as US President Donald Trump threatened to impose a new 10% tariff on any country that aligns itself with the "anti-American" BRICS group.

Writing on his Truth Social site, Trump said "there will be no exceptions to this policy".

Dan Coatsworth, investment analyst at AJ Bell, said: "Countries and regions are bracing themselves for trade letters from the US as the Trump administration moves to the next phase of its tariff regime.

"Trump might be treating it in the same way as a final notice letter - get your act together and agree to a deal or be put back on the higher tariff rates outlined in the Liberation Day announcement.

"We now have some clarity on how the system will work. Rather than a hard deadline of 9 July where all countries without a trade deal will revert to the higher rates announced on 2 April, the new tariff regime begins on 1 August. More countries are expected to confirm trade deals in the coming days, and extensions are possible beyond the 9 July hurdle for countries where negotiations are deemed to be going well.

"In theory, this clarity - albeit still slightly murky rather than crystal clear - should have had a positive reception from investors as the hard deadline has effectively been pushed back three weeks. However, markets were mixed across Asia and Europe on Monday, with futures prices implying a red day for Wall Street later on.

"What’s troubling investors is Trump potentially moving the goalposts yet again. He has form in constantly coming up with new terms and conditions and has now threatened an extra 10% tariff on countries who align themselves with ‘anti-American policies’ of BRICS nations.

"He also suggests some tariffs could reach up to 70%, greater than the previous maximum amount on the Liberation Day menu. Investors would much prefer one set of rules and for the Trump administration to stick to them."

On home shores, the latest data from Halifax showed that house prices were flat on the month in June, following a 0.3% dip in May.

On the year, house prices were up 2.5% last month, down from 2.6% growth in May.

The average price of a property stood at £296,665 in June, down from £296,782 the month before.

Amanda Bryden, head of Mortgages at Halifax, said: "The market’s resilience continues to stand out and, after a brief slowdown following the spring stamp duty changes, mortgage approvals and property transactions have both picked up, with more buyers returning to the market. That’s being helped by a few key factors: wages are still rising, which is easing some of the pressure on affordability, and interest rates have stabilised in recent months, giving people more confidence to plan ahead.

"Lenders have also responded to new regulatory guidance by taking a more flexible approach to affordability assessments. Over the last two months, we’ve already helped an additional 3,000 buyers - including more than 1,000 first-time buyers - access a mortgage they wouldn’t have qualified for before.

"Of course, challenges remain. Affordability is still stretched, particularly for those coming to the end of fixed-rate deals. The economic backdrop also remains uncertain; while inflation has eased, it’s still above target, and there are signs the jobs market may be softening.

"But with markets pricing in two more rate cuts from the Bank of England by year end, and the average rate on newly drawn mortgages now at its lowest since 2023, we continue to expect modest house price growth in the second half of the year."

In equity markets, Shell was the biggest loser on the FTSE 100 as the oil giant said second-quarter gas and oil results would be significantly lower than the previous quarter due to recent volatility. BP was also in the red.

Plus500 gained as it posted a 12% jump in second-quarter EBITDA to $91.3m.

Hospitality group SSP edged higher after saying it has opened public bidding for the IPO of its joint-owned Indian operations in a proposed stock market listing in Mumbai that could be worth up to £1.23bn.

In broker note action, Weir Group was a high riser after an upgrade to ‘buy’ at Citi.

Currys slumped, however, after a downgrade to ‘sector perform’ from ‘outperform’ at RBC Capital Markets, which said it was time to take profits after a strong run.

Source: Sharecast

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Adam

Stocks

London's main stock indexes were mixed on Monday as investors focused on corporate updates and a three-week delay in higher U.S. tariff rates, alongside progress on trade agreements.

The blue-chip FTSE 100 was flat by 0910 GMT, while the domestically oriented midcap index rose 0.2% after ending the previous week in the red.

U.S. President Donald Trump said on Sunday that Washington was close to several trade agreements and would notify other countries of higher tariff rates set to go into place on August 1, a delay from the July 9 deadline.

Oil and gas stocks weighed on the index, dropping 2.6%, with energy giant Shell losing almost 3% after trimming its second-quarter outlook for integrated gas division and liquefied natural gas production ahead of full results.

Other oil companies also came under pressure with oil prices slipping after OPEC+ hiked output above expectations in August. BP was down 1.9%. Diversified Energy, Harbour Energy and Ithaca Energy all fell over 1% on the midcap.

Among individual stocks, miner Ferrexpo slid 1.7% as iron ore production fell after the discontinuation of Ukraine's value-added tax refunds reduced operations.

Electricals retailer Currys fell 6.2% and led midcap losses, after an RBC downgrade.

Online trading platform Plus500 was among the top gainers on the FTSE 250 after positive second-quarter results.

Weir Group was the top gainer on the blue-chip after Citigroup raised its rating and price target.

On the data front, Halifax data showed that British house prices stagnated in June from the previous month following the increase in tax on property transactions from April.

In other news, British finance minister Rachel Reeves is set to announce a 28.6 million pound ($39 million) investment into a carbon capture project, which is expected to create jobs in central and northern England.

source : Reuters

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Glendon

Economic

Stocks

FundamentalOverview

The S&P 500 continuesto be supported given the lack of bearish drivers. Last Thursday’s NFP lookedlike it could offer a bigger pullback on a hawkish repricing in interest rateexpectations but the positive data came with lower wage growth, which is greatfor the stock market.

In the short-term, the onlyrisk I can see is further hawkish repricing in interest rates expectations, butwe will likely need a hot CPI for that. That should provide a deeper pullback. Butgiven that the Fed's reaction function remains to either wait more or cut, themarket should eventually get back to its upward trend.

We now have two main risksahead for the bulls: tariffs noise and US CPI. The White House is expected tosign trade deals and send letters with the new tariff rates to countries thathave not reached a deal yet. The good news is that we have once again adeadline, which is August 1st. Therefore, it looks like the usual negotiationstactic to speed up the process and accept the US requests.

On the other hand, we havethe US CPI coming up next week. To keep the trend going, we would likely needsoft inflation figures as a hot report should trigger a deeper pullback.

S&P 500Technical Analysis – Daily Timeframe

S&P 500 Daily

On the daily chart, we cansee that the S&P 500 continued to print new all-time highs pretty much everydayonce the price broke above the February highs. From a risk managementperspective, the buyers will have a better risk to reward setup around theprevious all-time high at 6,160-ish level to position for the continuation ofthe uptrend. The sellers, on the other hand, will want to see the price breakinglower to pile in for a drop into the 6,000 level next.

S&P 500 TechnicalAnalysis – 4 hour Timeframe

S&P 500 4 hour

On the 4 hour chart, we cansee that we have an upward trendline defining the uptrend. If we were toget a pullback all the way into the trendline, we can expect the dip-buyers tolean on it to position for a rally into new all-time highs with a better riskto reward setup. The sellers, on the other hand, will look for a break lower toincrease the bearish bets into the 5,800 level next.

S&P 500 TechnicalAnalysis – 1 hour Timeframe

S&P 500 1 hour

On the 1 hour chart, we cansee that we have a minor upward trendline defining the bullish momentum on thistimeframe. The buyers will likely continue to lean on the trendline to keeppushing into new highs, while the sellers will look for a break lower to targeta deeper pullback into the 6,236 level first and, upon a further break lower,into the 6,160 price area.

Source: ForexLive

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Adam

Stocks

Forex

Stocks edged downwards and the dollar drifted near multi-year lows on Monday, after U.S. officials flagged a delay on tariffs but failed to provide specifics on the changes, while oil prices slid as OPEC+ opened the supply spigots more than expected.

The United States is close to finalising several trade agreements in the coming days and will notify other countries of higher tariff rates by July 9, President Donald Trump said on Sunday, with the higher rates to take effect on August 1.

"President Trump's going to be sending letters to some of our trading partners saying that if you don't move things along, then on August 1 you will boomerang back to your April 2 tariff level," U.S. Treasury Secretary Scott Bessent told CNN.

Trump in April announced a 10% base tariff rate on most countries and higher "reciprocal" rates ranging up to 50%, with an original deadline of this Wednesday.

However, Trump also said levies could range in value from "maybe 60% or 70%", and threatened an extra 10% on countries aligning themselves with the "Anti-American policies" of the BRICS group of Brazil, Russia, India and China.

With very few actual trade deals done, analysts had always suspected the date would be pushed out, though it was still not clear if the new deadline applied to all trading partners or just some.

Investors have grown somewhat used to the uncertainty surrounding U.S. trade policy and the initial market reaction was cautious. S&P 500 futures fell 0.44% and Nasdaq futures were down 0.6% in early European trading hours.

Europe's benchmark STOXX index was down just 0.02%, while MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS), eased 0.6%.

The muted market reaction to the latest tariff twist showed that investors were becoming more attuned to the cycle of dramatic lurches in U.S. trade policy under Trump, analysts said.

"The market now feels as if it has a handle on which countries or types of products will be most affected," said Scott Chronert, investment strategist for Citigroup.

"That doesn’t mean every scenario is priced in – it’s still set up for episodes of volatility. As always, people will sell first and ask questions later."

OPEC+ SQUEEZE

Safe-haven bonds were better bid, with 10-year Treasury yields down almost 2 basis points at 4.3379% .

Major currencies were mixed as the dollar index nudged up 0.4% to 97.292. The euro held at $1.1738 , just short of last week's top of $1.1830, while the dollar was 0.3% firmer at 145.02 yen .

The export-exposed Australian dollar was again used as a proxy for trade risk and fell 0.8% to $0.6500.

The dollar has been undermined by investor concerns about Trump's often chaotic tariff policy and what that might do to economic growth and inflation.

The same worries have kept the Federal Reserve from cutting rates and minutes of its last meeting should offer more colour on when the majority of members might resume easing.

It is a relatively quiet week for Fed speakers with only two district presidents on the docket, while economic data is also sparse.

The Reserve Bank of Australia is widely expected to cut its rates by a quarter point to 3.60% at a meeting on Tuesday, the third easing this cycle, and markets imply an eventual destination for rates of 2.85% or 3.10%.

New Zealand's central bank meets on Wednesday and is likely to hold rates at 3.25%, having already slashed by 225 basis points over the past year.

In commodity markets, gold slipped 0.7% to $3,311 an ounce , though it did gain almost 2% last week as the dollar fell.

Oil prices slid anew after the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, agreed on Saturday to raise production by a larger-than-expected 548,000 barrels per day in August.

The group also warned that it could hike by a similar amount in September, leaving analysts with the impression it was trying to squeeze lower margin producers and particularly those pulling oil from U.S. shale.

Brent dropped 0.4% to $68.01 a barrel, while U.S. crude fell 1.1% to $65.28 per barrel.

Source: Reuters

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Gerik

Economic

Forex

PBOC Survey Suggests Policy Alert Over Rapid Yuan Gains

The People's Bank of China (PBOC) has initiated a quiet but significant step in response to global currency movements. According to multiple sources, the central bank recently surveyed financial institutions about the U.S. dollar’s weakening trend and the implications for the yuan. Though the PBOC did not publicly comment, the move is being interpreted as a signal of rising concern over the potential for abrupt appreciation of the Chinese currency in the context of mounting trade uncertainties.

The timing of the survey is critical. It comes just days before the expiration of President Donald Trump's 90-day tariff pause on imports from numerous countries, and roughly a month before a broader set of China-specific triple-digit tariffs may be reimposed. These impending decisions heighten currency volatility risk and could exacerbate capital flow pressures for China.

Dollar Index Suffers Historic Decline as Trade Policy Weighs

The survey follows a steep decline in the U.S. dollar, which has seen its worst first-half performance since 1973. The dollar index (DXY), a benchmark measuring the greenback against a basket of six major currencies, is down 11% year-to-date and 6.6% since April 2 alone—coinciding with Trump's announcement of the "Liberation Day" tariffs.

This dollar weakening is attributed to multiple intersecting forces: aggressive fiscal expansion, market repricing of Federal Reserve rate cut expectations, and increasing global pushback against Washington’s trade policies. For China, a weakening dollar can inadvertently place upward pressure on the yuan, tightening financial conditions at a time when domestic growth remains uneven.

Yuan Strength Stable But Under Scrutiny

Although the yuan has remained relatively stable, with a modest gain of 1.3% since April, its trajectory has become more sensitive due to declining dollar strength. This relationship is more than mathematical—there is a strategic context. A stronger yuan could weaken the competitiveness of Chinese exports, just as Beijing seeks to maintain external stability amid fragile domestic recovery and geopolitical pressure from U.S. tariffs.

One interpretation of the PBOC’s outreach is that policymakers are preparing to preemptively manage currency expectations. A sharp yuan appreciation could trigger speculative inflows or lead to premature easing expectations, complicating the central bank’s monetary strategy. Additionally, it could embolden calls in Washington to escalate trade pressure under the guise of currency manipulation allegations.

Policy Implications and Forward-Looking Signals

While the PBOC’s inquiry is not a direct market intervention, it acts as a signal of policy attentiveness. It also reflects a potential shift from passive observation to more proactive calibration of capital and currency management tools. The bank may now be assessing whether to step in more visibly through open market operations, verbal intervention, or a recalibration of the yuan’s daily fixing mechanism to control appreciation pressure.

The broader context includes ongoing trade negotiations with the U.S., where the currency value of the yuan plays a critical role. If the dollar continues to slide and the yuan appreciates too quickly, the PBOC may need to act decisively to contain financial spillovers. By initiating dialogue with major financial institutions, the PBOC is gathering market intelligence to prepare contingency plans.

China’s central bank appears to be laying the groundwork for a more active posture in currency management as the global environment becomes increasingly reactive to U.S. policy moves. With the dollar falling sharply and geopolitical trade tensions resurfacing, the PBOC’s inquiry into dollar weakness underscores Beijing’s caution in allowing the yuan to appreciate too far, too fast. How Chinese policymakers respond next could shape capital flows, trade negotiations, and regional currency dynamics in the months ahead.