3 July 2025,06:17
Daily Market Analysis
3 July 2025, 06:17
Key Takeaways:
*GBP slips as UK fiscal concerns flare after Reeves fallout
*Stronger USD, delayed Fed cuts weigh on Sterling
*EUR outperforms as ECB-Fed divergence boosts euro flows
Market Summary:
The British Pound weakened this week, pressured by renewed fiscal unease in the UK and broad-based U.S. dollar strength amid shifting Fed rate expectations. Market sentiment turned cautious following Finance Minister Rachel Reeves’ emotional appearance in Parliament, which reignited investor concerns over the UK’s fiscal credibility and policy direction. A £5 billion budget shortfall tied to the government’s welfare U-turn has further fueled doubts, with borrowing costs rising sharply and political risk premiums creeping back into UK assets.
Meanwhile, the U.S. dollar regained ground as traders recalibrated expectations around the Federal Reserve’s rate path. Resilient U.S. economic data and hawkish Fed commentary have pushed back the timeline for rate cuts, lifting Treasury yields and underpinning the greenback. The pound’s underperformance was further exacerbated by growing uncertainty over global trade policy ahead of the July 9 tariff deadline, particularly as U.S. rhetoric toward the EU and Japan hardens.
Adding to GBP headwinds, the euro gained against major peers as the European Central Bank maintained a cautious stance on further easing, creating a relative policy divergence that favors EUR over GBP. Despite a still-hawkish Bank of England, markets now expect just two 25bps cuts in 2025, with the first delayed to August. However, lingering UK economic fragilities and a clouded political backdrop have limited Sterling’s ability to benefit from BoE positioning.
Looking ahead, key macro catalysts include the July 4 UK Services PMI and the U.S. nonfarm payrolls report on July 3. A strong U.S. print could reinforce dollar dominance, while a soft UK PMI would stoke stagflation concerns. As global risk appetite fluctuates and trade tensions linger, GBP remains vulnerable to both domestic and external shocks.
Technical Analysis
EUR/GBP has extended its bullish run, surging sharply and now testing the key resistance zone near the 0.8650–0.8660 region. This advance follows a decisive breakout above prior resistance at 0.8520 and reflects renewed Euro strength against the Pound, potentially fueled by shifting rate expectations and relative economic divergence.
The technical outlook appears constructive, underpinned by a strong impulsive rally and rising momentum. The Relative Strength Index (RSI) is currently elevated at 74, deep into overbought territory, which underscores strong bullish pressure—but also raises caution for potential near-term exhaustion. Historically, such RSI levels have preceded either consolidation or modest pullbacks.
Meanwhile, the Moving Average Convergence Divergence (MACD) supports the bullish case, with both MACD and signal lines trending higher in positive territory and the histogram continuing to expand. However, the rate of expansion appears to be moderating slightly, which could hint at early signs of bullish fatigue if not followed by further price acceleration.
Resistance Levels: 0.8650, 0.8740
Support Levels: 0.8520, 0.8390
Step into the world of trading with confidence today. Open a free PU Prime live CFD trading account now to experience real-time market action, or refine your strategies risk-free with our demo account.
This content is for educational and informational purposes only and should not be considered investment advice, a personal recommendation, or an offer to buy or sell any financial instruments.
This material has been prepared without considering any individual investment objectives, financial situations. Any references to past performance of a financial instrument, index, or investment product are not indicative of future results.
PU Prime makes no representation as to the accuracy or completeness of this content and accepts no liability for any loss or damage arising from reliance on the information provided. Trading involves risk, and you should carefully consider your investment objectives and risk tolerance before making any trading decisions. Never invest more than you can afford to lose.
Trade forex, indices, metal, and more at industry-low spreads and lightning-fast execution.
Sign up for a PU Prime Live Account with our hassle-free process.
Effortlessly fund your account with a wide range of channels and accepted currencies.
Access hundreds of instruments under market-leading trading conditions.
Trading Platforms
Learn
About PU Prime
Corporate
Please note the Website is intended for individuals residing in jurisdictions where accessing the Website is permitted by law.
Please note that PU Prime and its affiliated entities are neither established nor operating in your home jurisdiction.
By clicking the "Acknowledge" button, you confirm that you are entering this website solely based on your initiative and not as a result of any specific marketing outreach. You wish to obtain information from this website which is provided on reverse solicitation in accordance with the laws of your home jurisdiction.
Thank You for Your Acknowledgement!
Ten en cuenta que el sitio web está destinado a personas que residen en jurisdicciones donde el acceso al sitio web está permitido por la ley.
Ten en cuenta que PU Prime y sus entidades afiliadas no están establecidas ni operan en tu jurisdicción de origen.
Al hacer clic en el botón "Aceptar", confirmas que estás ingresando a este sitio web por tu propia iniciativa y no como resultado de ningún esfuerzo de marketing específico. Deseas obtener información de este sitio web que se proporciona mediante solicitud inversa de acuerdo con las leyes de tu jurisdicción de origen.
Thank You for Your Acknowledgement!
