GBPUSD:
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The pound enters Monday with support from the latest UK economic data. June GDP grew more strongly than expected, while previously released business activity indicators pointed to an improvement in the services sector. This reduces concerns about a sharp slowdown in the UK economy and allows the market to maintain a more resilient assessment of the British currency’s outlook.
At the same time, the US dollar lost some support after an unexpected decline in US retail sales and more moderate inflation readings. The probability of a Federal Reserve rate hike in September has fallen noticeably, while UK short-term interest rates remain elevated. For GBPUSD, this combination reduces pressure from the interest rate differential and supports demand for the pound.
The main constraint is the approach of important UK inflation and labor market data, which could change expectations for Bank of England policy. The upside potential therefore does not appear one-sided. Nevertheless, there is currently no strong local factor weighing on the pound, while the softer US dollar impulse coincides with resilience in the UK economy. If these conditions persist, the bias remains toward a moderate rise in GBPUSD.
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