7 August 2025,03:22
Daily Market Analysis
7 August 2025, 03:22
*The Pound gained as markets priced in a 25bps rate cut, with the possibility of a hawkish tone or a split vote offering potential upside.
*June CPI rose to 3.6%, well above the BoE’s 2% target, suggesting policymakers may keep rates higher for longer despite labour market softening.
*The UK secured a favourable 10% tariff rate from the U.S., easing trade tensions and boosting confidence in the export outlook.
The Pound Sterling edged higher in the recent session ahead of the Bank of England’s (BoE) highly anticipated rate decision, scheduled for today, August 7. Market participants are currently pricing in a 25-basis-point rate cut, but the relatively modest expectation has lent support to the currency.
A potentially divided Monetary Policy Committee (MPC) could strike a hawkish tone, which may offer further upside for the Sterling. While the UK labour market shows signs of cooling—with slowing wage growth—headline inflation rebounded to 3.6% in June from 3.4% in May, remaining well above the BoE’s 2% target. This elevated inflation backdrop may compel policymakers to maintain rates at restrictive levels for longer.
In addition, concerns over trade tensions have eased following the resolution of the U.S. tariff policy deadline. The UK successfully secured one of the lowest tariff rates—at 10%—in its deal with Washington, reducing downside risks to its export-driven sectors and supporting broader economic sentiment.
Sterling traders are advised to monitor the BoE’s policy language and vote split closely, as any deviation from current market expectations could spark heightened volatility in the currency.
The GBP/AUD pair has been trading in a bearish trend, declining more than 2% from its July peak. However, recent price action suggests a potential shift, with the pair entering a consolidation phase following the pronounced downtrend since early July. A breakout above the immediate resistance at the 2.0620 level would mark a bearish structure break and signal a possible bullish trend reversal.
From a momentum perspective, the RSI remains near the midline, indicating a neutral stance. However, the MACD has been forming a higher-high pattern and is now approaching a break above the zero line—an encouraging sign that bullish momentum may be building in the pair.
Resistance level: 2.0620, 2.0833
Support level: 2.0345, 2.0120
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