FX Report: 30th June - 3rd July 2025
Buy Side Target
1.3900
Sell Side Target
1.3500
Current Price
1.3713
As this week starts, we see GBPUSD hold at the 1.3770 region, which was our mid-term target. We can expect price to stall to find some value, as well as look for potential short entries for a further retracement due to our mid-term target being achieved. Should 1.3770 fail to hold the next stop would be 1.3900. We can expect retracements on price down to 1.3500, with failure to hold we can see price turn bearish, which our traders will be keeping a keen eye out for.
United Kingdom: Fiscal Policy and Market Reaction
Government U-turns Spark Market Anxiety: The UK government announces partial reversals of planned welfare and energy subsidy cuts, adding around £4.5 billion per year to its fiscal burden. This raises concerns over fiscal discipline and fuels speculation about Chancellor Rachel Reeves’s position, though Prime Minister Starmer moves quickly to dismiss resignation rumors.
Gilt Yields Surge, Pound Under Pressure: These fiscal policy reversals trigger a sharp sell-off in UK government bonds. Gilt yields rise significantly as investors demand more premium for risk. The pound weakens, trading near $1.36, with some analysts warning it may slip toward $1.33 in coming months if fiscal credibility erodes further.
Government Moves to Calm Markets: After PM Starmer reaffirms his support for Reeves, markets stabilise somewhat. Gilt yields ease slightly, and sterling recovers marginally, moving back toward $1.365 mid-week.
United States: Labor Data and Dollar Dynamics
June Jobs Report Strengthens the Dollar: U.S. non-farm payrolls show surprising strength, rising by an estimated 147,000 jobs in June, while unemployment ticks down to 4.1%. This supports the dollar and pushes U.S. Treasury yields higher.
Dollar Faces Broader Structural Pressures: Even with short-term gains, the dollar remains under medium-term pressure due to high U.S. debt, volatile tariff policy, and rising rate-cut expectations. The dollar has already fallen over 11% year-to-date, and many analysts predict further declines.
Shift from Safe Haven to Risk Appetite: While geopolitical tensions linger, easing oil prices and signs of softer U.S. growth encourage a partial shift away from safe-haven USD flows into risk assets. Investors watch tariff news and Fed commentary for clues.
Last FX Report: 23rd - 26th June 2025
Buy Side Target
1.3560
Sell Side Target
1.3370
Current Price
1.3420
Market Outcome
Bullish
Price had tapped into our sell-side target of 1.3370 as anticipated for the last 3 weeks, providing a 390 pip move into this week. It has hit both our short-term and mid-term targets of 1.3560 and 1.3770 respectively. Our traders using the past 3 weeks to rebalance their portfolios utilising short-term buying and selling opportunities, allowed them to capitalise on this bullish move fully, using our proprietary tools and theories.
*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:
