The European Central Bank (ECB) kept its Deposit Facility Rate steady at 2.00%, which was expected. After this update, the EUR/USD pair continued to drop, hovering around 1.1750. Now, all eyes are on Christine Lagarde’s upcoming conference. Gold prices fell to the $3,360 mark after the US Dollar gained strength and US Treasury yields increased. This drop follows a previous day’s decrease, with gold nearing $3,360 per troy ounce.

Current GBP/USD Trend

GBP/USD has dipped to about 1.3550 after three days of gains. This decline is linked to a stronger US Dollar and a general risk-off sentiment in the market. The S&P Global PMIs for July are expected to show that the US private-sector economy is still doing well. Many believe the Federal Reserve will keep interest rates steady at the end of the month, highlighting the strength of the US economy. During Trump’s second presidential term, there have been inconsistent policy changes focusing on “America First” priorities. Despite the turmoil, markets have remained stable over the past six months. A guide to the best brokers for EUR/USD trading in 2025 suggests options with competitive spreads and advanced trading platforms. Traders, whether new or experienced, can find suitable brokers for the Forex market.

Monetary Policy Divergence

The differences in monetary policy between the two central banks are becoming clearer. With Ms. Lagarde unlikely to take a more aggressive approach and strong US economic indicators, the EUR/USD may continue to trend down. It may be wise to consider buying put options on this pair to take advantage of its expected weaknesses. The drop in gold is mainly due to the stronger dollar and increasing bond yields. Recent data shows the US 10-year Treasury yield has crossed 4.3%, making gold, a non-yielding asset, less appealing to hold. This situation supports taking short positions in gold futures, as the cost of holding the metal is rising. Similarly, the decline in GBP/USD reflects a move to the safety of the US dollar. Recent UK economic news, like disappointing retail sales figures, contrasts with the positive S&P Global PMI data expected from the US. This reinforces the idea of using derivatives to profit from a further decline in the pound. Given the market’s resilience under Mr. Trump’s leadership, we shouldn’t be overly negative about US equities. However, we must be ready for sudden market swings. His policy announcements have historically led to spikes in the VIX index, which recently hovered near a multi-week low of 13.5. Buying VIX calls or similar long-volatility instruments could be a cost-effective way to hedge against unexpected political changes. Create your live VT Markets account and start trading now.

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