The Pound Sterling (GBP) exhibits cautious trading, with underperformance noted over the past week. This decline is driven by cooling labour market conditions and persistent inflation, which may force the Bank of England (BoE) into a careful policy decision next week.<\/p>\n
Retail sales in the UK have fallen for the 10th consecutive month in July. Nonetheless, the decline showed improvement, with a drop to -34 from June\u2019s -46, suggesting a less severe contraction. Rising labour costs and economic uncertainty are impacting household demand and sales volumes.<\/p>\n
There is growing confidence that the BoE will reduce interest rates in August. The GBP has been weakest against the US Dollar, trading near a two-month low around 1.3350. This follows a favourable US-EU trade agreement that bolstered the US Dollar’s appeal. <\/p>\n
Attention shifts to high-level trade talks between the US and China, with expectations of an extended tariff truce. The GBP\/USD pair is also affected by upcoming US JOLTS Job Openings data and the Federal Reserve\u2019s monetary policy announcement, with stability in interest rates anticipated.<\/p>\n
The technical outlook for GBP\/USD remains bearish, trading below key levels like the 20-day EMA and RSI under 40.0. Support is noted at 1.3140, with resistance around 1.3790.<\/p>\n
Tariffs play a role in protectionism by supporting local industries. They differ from taxes but both aim to generate government revenue. With debates over tariffs’ effectiveness, some economists view them as protective, while others warn of negative long-term impacts and potential trade wars. Donald Trump\u2019s 2024 campaign emphasizes tariffs to bolster the US economy, focusing on top importers Mexico, China, and Canada.<\/p>\n
The Pound Sterling is showing signs of weakness as we approach the end of the month, underperforming over the last week. This cautious sentiment is fueled by a UK labour market that is beginning to cool off alongside inflation that remains persistent. These factors are putting pressure on the Bank of England ahead of its important policy decision next week.<\/p>\n
We are seeing the impact on consumer spending, with retail sales figures showing a drop for the tenth consecutive month in July. Although the decline to -34 from June\u2019s -46 indicates a slower rate of contraction, high labour costs and general economic uncertainty continue to weigh on household budgets. Statistics from recent months confirm this trend, with unemployment ticking up to 4.4% while wage growth stays elevated near 6.0%.<\/p>\n
Confidence is growing that the central bank will finally move to reduce interest rates at its August meeting, a possibility that is currently weighing down the currency. The Pound has been weakest against the US Dollar, trading near a two-month low around 1.3350. The Dollar\u2019s appeal was recently bolstered by a favourable trade agreement between the United States and the European Union.<\/p>\n
Our attention is now shifting to global factors, including high-level trade talks between the US and China where we anticipate an extension of the current tariff truce. We are also watching for the upcoming US JOLTS Job Openings data, which has been trending at multi-year lows, and the Federal Reserve’s policy announcement. The Fed is widely expected to hold its interest rates steady for now.<\/p>\n
From a technical standpoint, the outlook for the GBP\/USD pair remains bearish, as it is trading below key moving averages and the Relative Strength Index is under 40. Given this and the fundamental pressures, we see opportunities in using derivatives to position for further downside ahead of next week’s events. Buying put options could be a prudent strategy to capitalize on a potential break below the 1.3140 support level.<\/p>\n
The topic of tariffs adds another layer of complexity, as they are a stated focus for the current administration to support local industries. Historical analysis from the last decade shows that such protectionist measures can increase market volatility and provoke retaliatory actions. This potential for trade disputes, particularly with major partners like Mexico, China, and Canada, introduces a risk that derivative traders must monitor closely.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Pound weakens amid UK economic concerns, potential BoE rate cut, and global trade developments including US tariffs.<\/p>\n","protected":false},"author":62,"featured_media":17031,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-27562","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/27562","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=27562"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/27562\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17031"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=27562"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=27562"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=27562"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}