Sterling Caught Between Inflation Surprise and Escalating Global Tensions; FOMC Next
| Action Insight Daily 6-18-25 |
Sterling Caught Between Inflation Surprise and Escalating Global Tensions; FOMC Next |
Sterling weakened sharply overnight as risk appetite deteriorated on growing fears of military escalation in the Middle East. US President Donald Trump raised the stakes with Iran, issuing a public ultimatum to Supreme Leader Khamenei for “unconditional surrender” after claiming “total control” over Iranian airspace. There are intensified concerns that the US could intervene directly. The recent US–UK trade deal, while politically symbolic, has failed to offer material support to the Pound. Despite exemptions on aerospace and automobile tariffs, the unresolved dispute over steel and aluminum and the conditional structure of the agreement left investors unimpressed. Indeed, Sterling’s weak showing contrasts with resilience seen in Kiwi and Aussie, which benefits from relative insulation from the geopolitical flashpoints. Yet Sterling found support as European trading got underway, thanks to a firmer-than-expected inflation report. Notably, goods inflation surged to a seven-month high of 2.0%, suggesting that the impact of global tariffs may be starting to show up in consumer prices. Markets still expect BoE to deliver a rate cut in August, but the MPC’s decision on Thursday will be closely watched for signs of shifting sentiment with the Committee In the broader picture, today’s FOMC meeting may have little short-term impact unless the dot plot shifts decisively. With no surprises expected, traders may look elsewhere for direction. That “elsewhere” may once again be geopolitical developments and trade tensions. Trump continues to ramp up his rhetoric, the EU that they will either make a “fair deal” or pay “whatever we say.” A deadline of July 9 looms for reciprocal tariffs to resume, and negotiations remain mixed at best..... |
GBP/USD Daily Outlook Daily Pivots: (S1) 1.3364; (P) 1.3480; (R1) 1.3545; More... GBP/USD's steep decline confirms short term topping at 1.3631, on bearish divergence condition in 4H MACD. Intraday bias is back on the downside for correction to 55 D EMA (now at 1.3328). Strong support could be seen there to bring rebound. Brea of 1.3631 will resume the rally from 1.2099 and target 100% projection of 1.2099 to 1.3206 from 1.3138 at 1.3813. However, sustained break of 55 D EMA will indicate that deeper correction is underway. | |
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
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| 22:45 | NZD | Current Account (NZD) Q1 | -2.32B | -2.19B | -7.04B | -6.80B | | 23:50 | JPY | Trade Balance (JPY) May | -0.31T | -0.38T | -0.41T | -0.35T | | 23:50 | JPY | Machinery Orders M/M Apr | -9.10% | -9.60% | 13% | | 01:00 | AUD | Westpac Leading Index M/M May | -0.10% | -0.01% | | 06:00 | GBP | CPI M/M May | 0.20% | 0.20% | 1.20% | | 06:00 | GBP | CPI Y/Y May | 3.40% | 3.30% | 3.50% | | 06:00 | GBP | Core CPI Y/Y May | 3.50% | 3.50% | 3.80% | | 06:00 | GBP | RPI M/M May | 0.20% | 1.70% | | 06:00 | GBP | RPI Y/Y May | 4.30% | 4.20% | 4.50% | | 08:00 | EUR | Eurozone Current Account (EUR) Apr | 40.4B | 50.9B | | 09:00 | EUR | Eurozone CPI Y/Y May F | 1.90% | 1.90% | | 09:00 | EUR | Eurozone CPI Core Y/Y May F | 2.30% | 2.30% | | 12:30 | USD | Initial Jobless Claims (Jun 13) | 246K | 248K | | 12:30 | USD | Housing Starts May | 1.360M | 1.361M | | 12:30 | USD | Building Permits May | 1.420M | 1.422M | | 14:30 | USD | Crude Oil Inventories | -2.3M | -3.6M | | 16:00 | USD | Natural Gas Storage | 96B | 109B | | 18:00 | USD | Fed Interest Rate Decision | 4.50% | 4.50% | | 18:30 | USD | FOMC Press Conference |
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