Insights 
VT 
Meanwhile Global Currency Shifts
Gold Under Pressure
Constancy in policy from Threadneedle Street is presently the base case. However, if the inflation numbers show stickiness—especially in core or services prices—it may alter the rate path expectations rather abruptly. An unchanged bank rate would not be unexpected, but the tone of the minutes and forward guidance will set the tone for the next few weeks. What we’re watching is not just headline CPI, but how the underlying drivers react relative to earnings and consumer behaviour.
Sterling’s momentum, despite slowing, has technically maintained a bullish structure. Resistance near 1.3750 remains the next potential obstacle, but to reach it, we’d need a combination of hawkish language from the Monetary Policy Committee and continued weakness in the greenback. Short-term support around 1.3520 should hold unless there’s a dovish surprise—an unlikely scenario unless CPI sharply undershoots. From a tactical point of view, the skew remains biased upwards but sensitive to macro shifts.
Across broader FX, the recent rebound in the Australian Dollar adds weight to the idea that recent US Dollar weakness is being interpreted as more than just a correction. The Aussie regained 0.6500—an area it had struggled to stay above over recent months—driven largely by soft US inflation and dovish commentary from Federal Reserve officials. The Euro has similarly benefited, with EUR/USD pushing beyond 1.1600, supported not by positive European data, but by a shift in flows out of the Dollar complex. Interestingly, volatility remains compressed, hinting at complacency around these new levels.
Gold, which generally thrives in uncertain environments, has had a tougher time in recent sessions. Real yields in the US continue to drift upwards, offering better alternatives to non-yielding assets. The level around $3,380 per ounce is being tested, yet pressure persists as sentiment has leaned more towards risk-taking. Equity markets are drawing flows away, and in the absence of new geopolitical shocks, gold struggles to mount a credible recovery. That said, any surge in volatility could put it back on watchlists near-term.
Digital assets tell a different story. Ripple’s chart pattern currently resembles a typical short squeeze setup amid resurgent speculative interest driven by recent events in the Middle East. Geopolitical friction has long held a complex role in crypto valuations, but this time, localised bullishness appears more a result of positioning rather than broad-based market conviction. It remains a narrow trade.
Meanwhile, from the East, China’s data delivery remains mixed but generally leans towards positive momentum. While fixed-asset investment and property activity weaken marginally, consumer activity has picked up just enough to keep the recovery narrative alive. With retail sales showing higher levels, it reinforces the broader argument that domestic demand is taking a more prominent role in supporting growth metrics. This shift in composition of growth is subtle but worth noting. It aligns with policymakers’ intent to stabilise expansion through consumption, not just infrastructure or credit-fuelled mechanisms. Any indication that these trends hold into Q3 will further temper external concerns over Chinese demand in the global commodity cycle.
For traders in interest rate-sensitive markets, sensitivity to policy comments will increase in the coming sessions. If there’s a change in how inflation persistence is described by central bankers—not just in London, but across continents—it could quickly shift where yields head next. We will likely need to watch both hard data releases and the nuanced tones of policy statements to read into the next movement direction.
