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GBP/USD rises as USD falls after credit downgrade

The U.S. dollar has fallen sharply as the markets digested a surprise downgrade to the U.S. government's credit rating.

Moody’s downgraded the US sovereign credit rating by one notch on Friday amid concerns over the growing $36 trillion debt pile. Then you turn to the US dollar lower after four weeks of it rising, supported by optimism surrounding U.S. trade deals and authority in relations with China.

The downgrade comes as the trump administration tries to get its budget through Congress by early July.

Meanwhile, Trump's trade tariff talks remain in focus. The US started serious talks with the European Union, ending a deadlock. Other deals with Japan, South Korea, and India are still in progress.

Meanwhile, the UK is set to agree to a significant reset of ties with the EU, seeking closer collaboration on trade and defence to boost the economy and security.

These developments will come ahead of a busy week for UK data, including UK inflation PMI figures and retail sales figures for the coming days.
 

GBP/USD forecast – technical analysis

GBP/USD is rising out of range as it heads towards 1.34. The bullish engulfing candle and the RSI above 50 keep buyers hopeful of further gains.

Buyers will look to rise above 1.34 to bring 1.3445 and fresh 2025 highs into play.

Immediate support is at 1.3350, last week’s high. Below here 1.33 comes into play and the 1.3250 -1.32 zone.

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Oil falls on growth concerns in China, US

Oil prices are heading lower, weighed down by the downgrade of the US credit rating and after official data showed slowing growth in China's industrial output. These latest developments have raised concerns over the health of the world's two largest 2 economies.

Chinese industrial production slowed to 6.1% year over year in April, down from 7.7% in May, although this was above the 5.5% forecast.

Comments by U.S. Treasury Secretary Scott Bessent also weighed on the demand for the outlook for oil. Bessent said Trump will impose tariffs at the rate he threatened last month on trading partners who do not negotiate in good faith.

The market will continue to watch nuclear talks between Iran and the US. Signs of progress could raise concerns about an increased oil supply should oil restrictions be removed.
 

Oil forecast - technical analysis

Oil recovered from the 55.30 low, recovering above 60.00 before running into resistance at the 50 SMA at 64.00 last week and has eased lower. The price trades below its longer term falling trendline.

Sellers will look to break below 60.00 to extend losses towards 55.35. A break below here is needed for a lower low.

Buyers would need to recover above the 50 SMA at 64.00 to extend gains towards 65.00, the March low.

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