- The GBP/USD falls more than 0.40%, pressed by weak data from the United Kingdom and the divergence of policies between the BOE and the Fed that favors the strength of the dollar.
- Israel attacks Iranian nuclear and military sites; Iran responds with a rain of drones, feeding the global feeling of risk aversion.
- The US dollar is recovered for safe refuge flows and an optimistic feeling report from the University of Michigan for June.
The GBP/USD collapsed more than 0.40% on Friday, since geopolitical tensions caused a flow to the dollar shelter status after Israel launched an attack against Iran, which climbed the conflict in the Middle East. The PAR quoted about 1,3550 after reaching an annual peak of 1,3631.
The pound falls from the annual maximum while the fears of war and the solid US data raised the demand for refuge
Israel’s attacks pointed to Iran’s nuclear facilities, missile factories and military commanders, according to Israeli officials. Iranian media revealed that explosions were heard in Tehran and Natanz, being the latter crucial for the Iranian nuclear program.
Consequently, Iran responded against Israel and sent more than 100 drones to Israel.
Apart from the geopolitics, the dollar was driven by the latest consumer’s feeling report of the University of Michigan (UOM) in June, which showed that households are becoming more optimistic about the economy. The index rose from 52.2 to 60.5, while inflation expectations decreased for one year, from 6.6% to 5.1%, and for a period of five years, from 4.2% to 4.1%.
On the other side of the Atlantic, the United Kingdom’s economic agenda was absent on Friday. However, the data during the week revealed that the economy is slowing down. Manufacturing activity, employment and economic growth figures paint a difficult scenario for Foreign Minister Rachel Reeves, who announced the expenditure review.
In the short term, the path of lower resistance is that the USD/USD could continue to fall due to risk aversion. In addition, the divergence between the central banks would favor the US dollar, since the Federal Reserve officials (FED) adopted a more neutral to restrictive position.
Meanwhile, swap markets had discounted 50 basic relaxation points of the Bank of England (BOE) towards the end of the year.
GBP/USD price forecast: technical perspective
The GBP/USD could be consolidated in the short term, despite the fact that the torque reached a minimum of two days of 1,3515. However, the buyers bought the fall and pushed the torque up, with the aim of reaching the 1.36 mark. The relative force index (RSI) remains bullish but approaches its 50’s neutral line, indicating that buyers are taking a break.
If the GBP/USD exceeds 1,3600, the next resistance would be the maximum of the year to date in 1,3631, followed by 1.37. On the contrary, if the torque falls below 1,3550, the door would open to challenge 1,3500.
LIBRA ESTERLINA PRICE THIS WEEK
The lower table shows the percentage of sterling pound (GBP) compared to the main currencies this week. Libra sterling was the strongest currency against the Australian dollar.
| USD | EUR | GBP | JPY | CAD | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.28% | -0.35% | -0.48% | -0.75% | -0.02% | -0.17% | -1.15% | |
| EUR | 1.28% | 0.93% | 0.80% | 0.52% | 1.29% | 1.12% | 0.12% | |
| GBP | 0.35% | -0.93% | -0.04% | -0.40% | 0.37% | 0.19% | -0.80% | |
| JPY | 0.48% | -0.80% | 0.04% | -0.27% | 0.41% | 0.26% | -0.79% | |
| CAD | 0.75% | -0.52% | 0.40% | 0.27% | 0.72% | 0.59% | -0.40% | |
| Aud | 0.02% | -1.29% | -0.37% | -0.41% | -0.72% | -0.17% | -1.15% | |
| NZD | 0.17% | -1.12% | -0.19% | -0.26% | -0.59% | 0.17% | -0.98% | |
| CHF | 1.15% | -0.12% | 0.80% | 0.79% | 0.40% | 1.15% | 0.98% |
The heat map shows the percentage changes of the main currencies. The base currency is selected from the left column, while the contribution currency is selected in the upper row. For example, if you choose the sterling pound from the left column and move along the horizontal line to the US dollar, the percentage change shown in the box will represent the GBP (base)/USD (quotation).
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
