Event to watch today:
09:00 EET. GBP – Consumer Price Index
GBPUSD:
The pound enters the session near 1.3385 after several days of losses. Investors are assessing the first decisions of the new UK government and the possible methods of financing additional expenditure. Its commitment to maintaining existing fiscal rules has partly eased concerns, but the risk of higher borrowing and future tax increases continues to limit demand for the British currency.
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Recent data showed that the labor market is stabilizing at weak levels. Wage growth and unemployment were largely unchanged, while payroll figures failed to indicate a convincing recovery. This backdrop does not provide the Bank of England with sufficient grounds to adopt a significantly tighter policy stance. It also puts the pound at a disadvantage against the dollar, which is supported by higher US Treasury yields and demand linked to geopolitical uncertainty.
The external dollar impulse remains stronger than the pound’s local support factors. Even the attractive yields offered by UK assets do not fully offset fiscal uncertainty and weak employment dynamics. If oil prices and US Treasury yields remain elevated, the downside scenario continues to take priority for GBP/USD.
Trading idea: SELL 1.3385, SL 1.3420, TP 1.3300
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