The net positions for GBP have fallen to £-12K, down from £0.6K previously. This indicates a weaker outlook for the British currency in the market. EUR/USD jumped over 1.1550 due to disappointing US employment and ISM Manufacturing PMI data. This trend shows the Euro gaining strength while the US Dollar faces pressure at the week’s end.

Reversal In GBP/USD

GBP/USD turned positive above 1.3250 after a six-day decline. The drop in US Nonfarm Payrolls and Manufacturing PMI data played a key role in this turnaround. Gold prices reached a weekly high of about $3,350, boosted by lower US Treasury bond yields. This suggests that the market is reassessing the Fed’s rate outlook. In cryptocurrency news, Bitcoin fell below $115,000 after a strong July. Investors are nervous due to tough market conditions and possible downturns in August. The euro area’s economy is holding strong, supported by an EU-US deal and increased spending in Germany. Even though there are risks of rate cuts later on, indicators point to economic resilience.

Weak Sentiment For The British Pound

With net short positions on the British Pound now at -£12K, this is a notable change from last week, pointing to weak sentiment for Sterling. We haven’t seen such bearishness since the economic uncertainties of late 2024. The recent rise in GBP/USD above 1.3250 likely stems from dollar weakness rather than any real strength in the pound. The US Nonfarm Payrolls report was disappointing, showing just 95,000 jobs instead of the expected 180,000. This report heavily influences current market sentiment. As a result, the likelihood of a Federal Reserve rate cut by year-end has surged to over 60%, a major leap from just 35% last week. This makes shorting the dollar against stronger currencies an appealing strategy for the coming weeks. With the dollar weakening, the Euro stands as a key winner, especially with EUR/USD surpassing the 1.1550 resistance level. Recent data showing Eurozone Q2 GDP growth of 0.5%, better than expected, supports this view of underlying economic strength. We might explore call options on EUR/USD to take advantage of potential further gains. Gold’s rise to $3,350 an ounce can be linked to the US 10-year Treasury yield dipping below 3.0% for the first time in six months. This shift indicates a move toward safe assets and a reevaluation of interest rate expectations. As long as yields remain low, gold is likely to keep attracting buyers, possibly retesting earlier highs. Bitcoin’s decline below $115,000 could signal the end of the summer rally, so we should tread carefully. Historically, August has often been a month of correction for Bitcoin after strong summer performances, a trend that seems to be repeating. Rising selling volume suggests that traders are taking profits, so protective puts or reducing long exposure might be wise. Create your live VT Markets account and start trading now.

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