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As the GBP/USD chart shows, the pair dropped sharply last night, falling below the 1.34170 level. This move marked the lowest point for the pound against the dollar since the beginning of June.

One of the main drivers behind this decline is the strengthening of the US dollar, which is attracting market participants amid heightened geopolitical tensions and a potential escalation of military conflict between Iran and Israel, involving US armed forces. According to the latest reports, Donald Trump has warned Tehran that US patience is wearing thin.

Today, however, the pound has seen a slight rebound, supported by the release of the UK Consumer Price Index (CPI). While the data confirmed that inflation is easing, the pace of decline is slower than expected. This may reduce the likelihood of interest rate cuts by the Bank of England – which in turn has boosted the pound’s value.

What could happen next?

Technical Analysis of the GBP/USD Chart

Since the end of May, price fluctuations have formed an ascending channel (shown in blue), with bulls making several attempts to break the resistance level at 1.3600 – so far, without much success.

The sharp decline from point A to B suggests that the bears have seized the initiative, with the pair rebounding from the lower boundary of the blue channel.

GBP/USD traders may:

→ interpret the bounce from the lower blue boundary as an upward correction following a sharp fall;

→ use Fibonacci retracement levels to estimate potential upside. In such cases, particular attention is typically given to the 0.5–0.618 zone (highlighted in orange). Here, it aligns with the 1.3526 level, which acted as support on 12–13 June, but may now serve as resistance after being breached.

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Italian ECB Governing Council member Fabio Panetta warned that Eurozone inflation is likely to remain below the 2% target for an extended period. Speaking at a conference today, Panetta said the region continues to face a “persistently weak” economy, which, coupled with subdued price pressures, calls for caution on the monetary policy front.

He pointed specifically to "substantial" risks surrounding US trade policy and the Middle East conflict. These factors, Panetta said, make it “difficult to quantify” the clouded outlook.

"Against this backdrop, the ECB's Governing Council, at its most recent meeting, reaffirmed a flexible approach, keeping its options open," he said. "It will continue to take decisions on a meeting-by-meeting basis, without pre-committing to a defined course for monetary policy," he added.

Final Eurozone inflation figures for May confirmed further softening in price pressures, with headline CPI easing to 1.9% yoy from April’s 2.2% yoy. Core CPI (ex energy, food, alcohol & tobacco) also moderated to 2.3% yoy from 2.7% yoy. Services inflation, a key component closely tracked by ECB, slowed markedly from 4.0% yoy to 3.2% yoy, contributing to the broader disinflation trend across the bloc.

According to Eurostat, the largest contribution to the overall annual inflation rate came from services (+1.47 percentage points), followed by food, alcohol, and tobacco (+0.62 pp). Non-energy industrial goods added a modest +0.16 pp, while energy dragged the headline rate down by -0.34 pp. The moderation in services inflation is especially important given its linkage to wage growth.

Looking across the EU, headline inflation was steady at 2.2%, but divergence across member states is stark. Cyprus, France, and Ireland posted the lowest annual rates at 0.4%, 0.6%, and 1.4% respectively, while Romania, Estonia, and Hungary topped the inflation chart with rates above 4.5%. Annual inflation declined in 14 member states compared to April.

Full Eurozone CPI final release here.

As shown on the XNG/USD chart today, natural gas prices are trading around $3.960 per MMBtu — the highest level in over a month. This week’s series of bullish candles confirms strong demand.

Natural gas is becoming more expensive due to concerns over the military conflict between Iran and Israel. According to media reports:

→ Israel has attacked Iran’s South Pars gas field, and Donald Trump has called for the evacuation of Tehran.
→ Market participants fear that a blockade of the Strait of Hormuz could disrupt oil and natural gas supply chains.

In addition, forecasts of extreme heat in the US and increased demand for gas-powered air conditioning are also pushing prices higher.

Technical Analysis of the XNG/USD Chart

The chart shows that since mid-May, natural gas price movements have formed a narrowing triangle, suggesting a temporary balance between supply and demand.

However, the triangle has been broken to the upside — a sign of demand strength — with the price:

→ breaking through resistance at $3.800 per MMBtu;

→ forming the outlines of an ascending channel (shown in blue).

The following factors could act as resistance to the current upward move in natural gas prices:

→ the upper boundary of the channel;

→ the psychological level of $4.000 per MMBtu, near the May peak.

However, given that the hottest months of summer lie ahead and the situation in the Middle East remains highly volatile, it is reasonable to assume that the upward trend may continue.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Daily Pivots: (S1) 194.40; (P) 195.63; (R1) 196.34; More...

GBP/JPY's pullback from 196.83 extended lower and intraday bias is turned neutral. Further rise will remain in favor as long as 193.75 support holds. Firm break of 196.83 will target 199.79 resistance first. However, sustained break of 139.75 will indicate near term reversal and turn bias to the downside for 191.86 support and possibly below.

In the bigger picture, price actions from 208.09 are seen as a correction to rally from 123.94 (2020 low). Strong support should be seen from 38.2% retracement of 123.94 to 208.09 at 175.94 to contain downside. However, sustained break of 175.94 will bring deeper fall even still as a correction.

Daily Pivots: (S1) 166.45; (P) 167.04; (R1) 167.36; More...

Intraday bias in EUR/JPY stays mildly on the upside despite loss of momentum as seen in 4H MACD. Current rise from 154.77 is in progress. Next target is 100% projection of 154.77 to 165.19 from 161.06 at 170.45. For now, further rally is expected as long as 164.91 support holds, in case of retreat.

In the bigger picture, price actions from 175.41 are seen as correction to up trend from 114.42 (2020 low). Strong support should be seen from 38.2% retracement of 114.42 to 175.41 at 152.11 to contain downside. However, sustained break of 152.11 will bring deeper fall even still as a correction.

Daily Pivots: (S1) 0.8520; (P) 0.8538; (R1) 0.8566; More...

EUR/GBP's rise from 0.8354 resumed after brief consolidations. Intraday bias is back on the upside for 61.8% retracement of 0.8737 to 0.8354 at 0.8591. Firm break there will pave the way to 0.8373 resistance. For now, further rally will remain in favor as long as 0.8492 support holds, in case of retreat.

In the bigger picture, price actions from 0.8221 medium term bottom are merely forming a corrective pattern to the down trend from 0.9267 (2022 high). Nevertheless, there is no clear momentum to break through 0.8201 key support (2022 low) yet. Hence, range trading is expected between 0.8221/8737 for now.

Daily Pivots: (S1) 1.7674; (P) 1.7716; (R1) 1.7767; More...

No change in EUR/AUD's outlook. Intraday bias stays neutral for consolidations below 1.7880 and further rally is expected with 1.7459 support intact. Above 1.7880 will target 61.8% retracement of 1.8554 to 1.7245 at 1.8054. Firm break there will pave the way to 1.8554. However, break of 1.7459 will dampen this bullish view and bring deeper decline back to 1.7245 low.

In the bigger picture, with 55 W MACD staying well below signal line, 1.8554 is likely a medium term top already. Price actions from there are seen as a corrective pattern only. While deeper pullback might be seen, downside should be contained by 38.2% retracement of 1.4281 (2022 low) to 1.8554 at 1.6922 to bring rebound. Up trend from 1.4281 is still expected to resume at a later stage.

Daily Pivots: (S1) 0.9350; (P) 0.9384; (R1) 0.9409; More....

EUR/CHF is still bounded in range trading and intraday bias remains neutral. On the upside, break of 0.9428 will resume the rebound from 0.9218 through 0.9445 resistance. However, break of 0.9291 will bring retest of 0.9218 instead.

In the bigger picture, prior rejection by long-term falling channel resistance (now at 0.9527) retains medium term bearishness. That is, down trend from 1.2004 (2018 high) is still in progress. Firm break of 0.9204 (2024 low) will confirm resumption. This will remain the favored case as long as 0.9660 resistance holds.

Daily Pivots: (S1) 1.3593; (P) 1.3644; (R1) 1.3730; More...

Intraday bias in USD/CAD is turned neutral first with current recovery and some consolidations would be seen above 1.3538 temporary low. Further decline is expected as long as 1.3749 support turned resistance holds. Below 1.3538 will extend larger fall from 1.4791 to 100% projection of 1.4414 to 1.3749 from 1.4014 at 1.3349. However, considering bullish convergence condition in 4H MACD, firm break of 1.3749 will indicate short term bottoming, and bring stronger rebound back to 1.4014 resistance.

In the bigger picture, price actions from 1.4791 medium term top could either be a correction to rise from 1.2005 (2021 low), or trend reversal. In either case, further decline is expected as long as 1.4014 resistance holds. Next target is 61.8% retracement of 1.2005 (2021 low) to 1.4791 at 1.3069.