The GBP/USD faced some losses during the North American session after the Federal Reserve decided to keep interest rates steady without clear guidance for September. Strong jobs data and rising inflation helped the Dollar, pushing the GBP/USD down to 1.3214, down from a high of 1.3281. In the European session, the Pound Sterling struggled around 1.3200 against the US Dollar, marking its sixth day of decline. The US Dollar Index remained strong, hovering near a two-month high of about 100.00, adding to the pressure on the GBP/USD pair.

Asian Session Performance

During the Asian session on Thursday, GBP/USD saw some buying interest, recovering slightly from the previous day’s low since mid-May. The pair traded just above the mid-1.3200s but caution is advised when considering a recovery. Meanwhile, the AUD/USD hovered around five-week lows between 0.6430 and 0.6420. The EUR/USD made a recovery, moving back to the 1.1460 level despite the Greenback reaching a two-month high. Gold faced selling pressure and struggled to stay above $3,300, while Ripple’s price retracted to $3.09 as it struggled to break through resistance. With the Federal Reserve’s unclear plans for September, the strong US Dollar is expected to be the leading theme for the coming weeks. The July jobs report added a solid 280,000 positions, and the CPI rose to 3.5%. This suggests the Fed is unlikely to change its stance, reinforcing the strength of the Dollar and making bearish positions against it risky.

Exchange Rate Strategies

For the GBP/USD, we see the most likely movement as downward, especially as it struggles near the 1.3200 mark. The Bank of England’s cautious tone from late July, along with unexpected UK retail sales figures showing a decline, points to fundamental weakness. Traders might consider buying GBP/USD put options to profit if it breaks below this key level. The decline of the Australian Dollar is clearer, especially after recent manufacturing data from China fell into contraction territory, impacting sentiment for the AUD. We expect continued weakness against the Greenback, and selling AUD/USD call options might be a smart strategy to take advantage of limited upside potential in the upcoming weeks. Interestingly, the Euro shows resilience, likely due to hawkish comments from European Central Bank officials last week. This divergence suggests the EUR may perform better than other currencies, especially the Pound. A possible strategy is to trade the EUR/GBP cross, going long on the Euro and shorting the Pound to take advantage of this specific strength. In the commodities market, Gold is struggling to hold above $3,300 due to the strong Dollar and rising real yields, which raise the opportunity cost of holding the non-yielding metal. Historically, gold prices tend to fall even amid inflation if the Dollar remains strong. This environment also dampens interest in riskier assets like Ripple, which will likely have a tough time until the Dollar’s momentum slows. Create your live VT Markets account and start trading now.

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