Pound Loses Momentum Amid Interest Rate Drama
The pound sterling weakened against the US dollar during Monday's trading (August 3). The GBP/USD pair traded in the 1.3450–1.3460 range, having previously touched a daily high of around 1.3506. Dollar strength halted the pound's three-session winning streak.
The dollar found support after US manufacturing activity grew stronger than expected. The ISM Manufacturing PMI surged to 55.6 in July from 53.3 in June, reaching its highest level since May 2022. The data indicates that the US economy remains resilient in the face of high interest rates.
The dollar index hovered around 99.7, though its recovery was capped by joint intervention from the United States and Japan to strengthen the yen. The threat of further action has made market participants cautious about increasing long positions on the dollar, particularly against the Japanese currency.
In the UK, investors are closely watching the fiscal policies of Prime Minister Andy Burnham's new government. The government has asked several ministries to cut costs to meet spending commitments; consequently, concerns regarding growth and the budgetary outlook continue to limit the pound's gains.
Geopolitical sentiment has also eased after President Donald Trump called off a strike on Iran and opted for diplomacy instead. Hopes for the opening of the Strait of Hormuz pushed oil prices below US$80 per barrel, helping to alleviate global inflation concerns.
Newsmaker Analysis: GBP/USD remains vulnerable to downward pressure as long as it stays below the 1.3500–1.3510 level. A drop below 1.3430 could pave the way toward 1.3400. Conversely, a break above 1.3510 is required to reignite the pound's upward momentum. Solid US data supports the dollar, but yen intervention and falling oil prices could limit its gains. (arl)
Source: Newsmaker.id
