FX Report: 11th - 14th August 2025
Buy Side Target
1.3730
Sell Side Target
1.3330
Current Price
1.3442
GBPUSD has shown short-term bullish pressure following the hold of price at 1.3200. Our short-term targets are at 1.3570 and mid-term at 1.3730 for the upside. Should 1.3400 fail to break we expect price to test 1.3330 and failure of this level could suggest a downturn shift in trading for GBP.
United Kingdom: Monetary Caution Amid Sticky Inflation
Bank of England Holds Rates at 4%
Today, the Bank of England keeps its key interest rate unchanged at 4%, following a close 5–4 vote. Although recent cuts have eased borrowing costs, elevated inflation—particularly in food and wage pressures—leads the BoE to signal that further reductions will be cautious and incremental.
Inflation Exceeds Expectations—Complicating the Outlook
UK headline inflation rises unexpectedly to 3.8% in July, driven primarily by sharp increases in food and transport costs—airfares surged about 30%. This stronger reading reinforces concerns around inflation persistence, dampening market expectations for additional rate cuts this year.
Worsening Food Price Pressures
Food price inflation hits 4.2% year-on-year, the highest in 17 months, fueled by increases in staples like eggs, butter, and chocolate. These pressures add to the inflation challenge, especially as they feed into consumers' expectations, complicating the inflation outlook further.
United States: Dollar Firm as Markets Brace for U.S. CPI
USD Firming Ahead of U.S. Inflation Data
The U.S. dollar strengthens modestly, as markets await the upcoming U.S. CPI report expected on Tuesday. A rebound in the dollar is under way, driven by renewed focus on U.S. inflation risks and potential implications for the Federal Reserve’s policy path.
Positioning Ahead of Key U.S. Releases
GBP/USD is slightly retreating from recent gains as traders adjust to the prospect of tighter U.S. monetary policy if inflation surprises to the upside this week.
Last FX Report: 4th - 7th August 2025
Buy Side Target
1.3400
Sell Side Target
1.2763
Current Price
1.3260
Market Outcome
Bullish
Following the extreme volatility seen on GBPUSD last week, we see price find value between the region of 1.3200 and 1.3300 alleviating temporary sell pressure and allow short-term rebalancing of portfolios to hedge against the mid-term bearish direction. Our traders understood these concepts to be able to execute both buys and sell when given the opportunity using our proprietary tools and software.
*Contracts for difference (CFDs) are complicated financial contracts based on leverage, which can possibly result in huge fluctuations in profits or losses. Therefore, it is essential to study and understand CFDs thoroughly before embarking on investment. You should at the same time stay conscious and ready yourself for the potential risk of losing a part or your whole capital. This outlook is non-financial advice, you should consult with your personal financial advisor before making any investment decisions.
How we traded this outlook:
