GBP/USD falls amid chip fears, Fed/BoE caution and UK political uncertainty
The pound retreated 0.13% despite the dollar holding steady, as investors turned risk‑off following news that a Chinese state‑backed firm is beginning to manufacture chip‑making equipment. The development sparked a sell‑off in Dutch semiconductor leader ASML, pressuring sterling. GBP/USD was quoted at 1.3305, after touching a high of 1.3363 earlier in the session.
Markets also absorbed a modest improvement in U.S. durable‑goods orders for June, which rose 0.3% month‑over‑month after a 4% contraction, though the figure fell short of the 1.6% expansion forecast. Attention now shifts to the Federal Reserve’s policy meeting, where a rate hold remains the consensus view (around 60% probability). Odds of a 25‑basis‑point hike are slim, hovering near 40% according to Prime Terminal data.
In the United Kingdom, the Bank of England’s policy meeting is scheduled for this week. Investors expect the BoE to keep its benchmark rate unchanged at 3.75%, even as oil prices jumped in July. The central bank’s stance is seen as a supportive factor for sterling, though broader concerns persist.
Additional pressure on the pound stems from market scrutiny of the new government led by Prime Minister Andy Burnham. Investors are weighing the administration’s policy direction and its potential impact on fiscal stability and economic growth.
GBP/USD Price Forecast: Technical Outlook
On the daily chart, GBP/USD trades at 1.3304, maintaining a modestly bearish bias as the price remains below the cluster of simple moving averages now clustered near 1.3367. The pair also stays under the broader downtrend resistance line projected from the 1.3465 break, while the Relative Strength Index (14) sits around 43, suggesting limited upside momentum rather than outright selling capitulation.
Initial resistance is encountered at the simple moving average zone around 1.3367; a sustained break could expose the downtrend barrier linked to the 1.3465 area. On the downside, the next notable technical floor is the rising support trend line anchored near 1.3159, where buyers may regroup if bearish pressure deepens.
(The technical analysis of this story was written with the help of an AI tool. Know more.)