South Africa’s manufacturing production index increased by 1.9% year-on-year in June, exceeding the expected growth of 1%. This uptick indicates healthy progress in the country’s manufacturing sector. The EUR/USD dropped to around 1.1600 due to a stronger US Dollar, partly stemming from hopes of a lasting US-China trade truce. Likewise, GBP/USD fell to about 1.3420, as traders await new data releases.

Gold Price Movements

Gold prices faced pressure, decreasing to $3,350 per troy ounce. This decline followed optimism related to US-Russia talks on Ukraine and ongoing discussions about extending the US-China trade agreement. The Bank of England cut interest rates by 25 basis points to 4%, hinting that the easing cycle might soon come to an end. There are concerns about ongoing inflation, which remains above the target rate. Foreign exchange trading carries significant risks, including the potential loss of your entire investment. Trading on margin requires careful thought about your investment goals and risk tolerance. It’s wise to seek professional advice before engaging in foreign exchange trading. Looking back from August 11, 2025, that 1.9% rise in South Africa’s manufacturing now feels distant. Since the 2024 national elections, we’ve experienced notable volatility. Recent data for June 2025 shows only a 2.2% year-on-year increase, indicating that anyone betting on the South African Rand should remain cautious due to ongoing economic challenges.

Currency Trading Dynamics

The EUR/USD level of 1.1600 now seems unreachable. Currently, it hovers around 1.0850, as the US Federal Reserve has been slower to cut interest rates than the European Central Bank. Since US core inflation stayed stubborn at 2.8% last month, we expect the Dollar to remain strong against the Euro. The GBP/USD, once trading around 1.3420, now struggles to maintain the 1.2650 level. This is primarily due to the Bank of England’s ongoing fight against high services inflation, which exceeds 4% even as the economy slows. Gold’s drop to $3,350 per ounce takes us back to its pullback from earlier record highs. Those peaks were fueled by large gold purchases from central banks in 2024 amid heightened geopolitical tensions. As gold now trades near $3,100, we question whether the optimism that caused the previous drop will linger as inflation gradually eases. The Bank of England’s decision to cut rates to 4% while signaling an end to further reductions has come true, with the cut occurring in the second quarter of 2025. However, the warning about ongoing inflation also proved accurate, creating challenges for traders. This uncertainty regarding the Bank’s future moves suggests more volatility ahead in UK interest rate markets and the Pound. It’s crucial to remember that foreign exchange and derivative trading involve significant risks, including the potential loss of your entire investment. Trading on margin necessitates careful consideration of your investment strategies and risk tolerance. We strongly recommend consulting with a professional before getting involved in these markets. Create your live VT Markets account and start trading now.

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