The British Pound Sterling (GBP) retreated by 0.13% against the US Dollar (USD), trading at 1.3305 after reaching a high of 1.3363, as risk appetite soured following news that a Chinese state-backed company is producing chipmaking machines. This development prompted a sell-off in ASML, the Dutch-based company, and contributed to a broader risk-off mood in the markets [1].
Despite the Greenback remaining flat during the day, the GBP/USD pair slipped due to several factors, including concerns over chipmaking, caution ahead of the Federal Reserve (Fed) and Bank of England (BoE) monetary policy meetings, and ongoing UK political uncertainty. The de-escalation of the Middle East conflict provided some relief to major central banks, as oil prices slid after the US paused attacks on Iran over the weekend. US President Donald Trump warned of further military action if negotiations between Washington and Tehran fail, stating that any attacks would be 'very powerful' [1].
On the economic front, US Durable Goods Orders for June improved from a -4% contraction to a 0.3% month-over-month increase, though this missed estimates of a 1.6% expansion. Market participants are focused on the upcoming Fed meeting, with a 60% probability that rates will remain unchanged and a 40% chance of a 25-basis-point hike, according to Prime Terminal data. In the UK, no major economic data was released, but investors are awaiting the BoE meeting, where the consensus is that rates will be held steady at 3.75%, despite a recent jump in oil prices [1].
Technical analysis indicates that GBP/USD maintains a mild bearish bias, trading below the simple moving average cluster near 1.3367. The Relative Strength Index (14) is around 43, suggesting subdued upside momentum. Key resistance is at 1.3367, with further resistance at the 1.3465 region, while notable support lies near 1.3159 [1].
Sterling is expected to remain under pressure as investors assess the intentions of the new UK government led by Prime Minister Andy Burnham [1].
CONCLUSION
The British Pound's decline reflects a combination of risk-off sentiment, central bank policy uncertainty, and UK political developments. Market participants are closely watching upcoming Fed and BoE meetings for further direction. Until greater clarity emerges, Sterling is likely to remain pressured.