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The British pound has edged higher on Tuesday. In the European session, GBP/USD is trading at 1.3218, up 0.34% on the day.

UK employment, wages cool

Uncertainty over the global economy, particularly US tariff policy, weighed on the UK employment report. The economy added 112 thousand jobs in the three months ending in March, down sharply from 206 thousand a month earlier and shy of the market estimate of 120 thousand. It was the weakest job growth in three months.

The unemployment rate inched up to 4.5% from 4.4%, in line with expectations and its highest level since August 2021. Wage growth including bonuses eased to 5.5% from a revised 5.7%, above the market estimate of 5.2%.

The Bank of England cut rates by a quarter-point to 4.25% last week but remains in a bind. The cooling job market should push inflation lower but wage growth remains stubbornly high and is an upside risk to inflation. The BoE will have to carve out a rate path that balances a weaker labor market with high wage growth - this could mean a delay in further rate cuts until late in the year. The BoE meets next on June 19.

US CPI expected to rise in April

The US releases the April inflation report later today. Headline CPI is expected to rise to 0.3% m/m, up from -0.1% in March, which marked the first decline since June 2024. Annually, headline CPI is expected to remain unchanged at 2.4%. Core CPI is also expected to climb to 0.3% from 0.1%. Annually, core CPI is projected to remain at 2.8%.

The escalating trade tensions due to US tariffs have raised concerns that US growth will fall and inflation will decline, even resulting in a recession in the US. The US-China agreement to slash tariffs, which will be in effect for 90 days, is an important de-escalation in the trade war and should curtail inflation and reduce the risk of a recession.

GBP/USD Technical

• GBP/USD is testing resistance at 1.3205. Above, there is resistance at 1.3271
• 1.3112 and 1.3046 are the next support levels

GBPUSD 1-Day Chart, May 13, 2025

Investor sentiment in Germany and the wider Eurozone improved sharply in May, with ZEW Economic Sentiment Index for Germany jumping from -14.0 to 25.2, well above the expected 9.8. Eurozone sentiment followed suit, rising from -18.5 to 11.6, also beating expectations.

According to ZEW President Achim Wambach, the rebound reflects growing optimism tied to easing trade tensions, a new German government, and stabilizing inflation, helping to offset last month’s sharp deterioration.

However, views on current conditions remain deeply negative. Germany’s Current Situation Index edged down further from -81.2 to -82.0, missing forecasts. Eurozone’s improved modestly but still stood at -42.2. This divergence suggests that while expectations for the months ahead are improving, near-term economic conditions remain fragile, particularly in Germany.

Full German ZEW release here.

Market Picture

The Crypto market cap has fallen 1.7% in the last 24 hours to $3.29 trillion, despite continued positive traction in the equity market. The strengthening dollar on news of tariffs has been a natural drag on cryptos. This is doubly true due to Bitcoin’s proximity to the highs, reinforcing the pull for short-term profit taking after rallying in just over a month.

The sentiment index is stuck at 70 for a fourth day, indicating investors continued healthy greed despite the intraday pullback.

Bitcoin showed its unpredictable nature on Monday, dropping to $100.5k at one point, contrary to the impressive rally in other markets. But it was clearly profit taking followed by buying that brought the price back to $102.7k. With the positivity remaining, it is worth paying attention to the price dynamics near $105k. Will we see an acceleration or a new failure? The answer will allow for the prediction of the dynamics of the next days.

News Background

According to CoinShares, global investments in crypto funds rose by $882 million last week, with significant inflows for the third week in a row. Bitcoin investments increased by $867 million, Ethereum by $1.5 million, XRP by $1.4 million, and Sui by $12 million. Investments in Solana decreased by $3.4 million.

Coinshares suggests that the growth of investments was due to a combination of factors: the global growth of the M2 money supply, risks of stagflation in the US, and the approval of bitcoin as a strategic reserve asset by several US states.

HTX Research believes that Bitcoin’s current growth is being fuelled by institutional investors, including Abu Dhabi’s sovereign wealth fund and BlackRock’s increasing position in the BTC-ETF.

Presto Research noted that Bitcoin’s dominance has reached levels last seen before the 2021 bull market, and capital is starting to flow into altcoins.

Nakamoto Holdings will be the first publicly traded conglomerate to integrate cryptocurrency into traditional financial structures. It aims to raise $710 million to create a Bitcoin reserve.

Options on Solana (SOL) recorded large call option purchases with a 27 June maturity and a $200 strike, Amberdata notes. If SOL crosses the $200 mark, volatility may increase sharply.

Yesterday, Hong Kong’s Hang Seng Index (Hong Kong 50 on FXOpen) climbed above the 23,600 mark, supported by progress made during US–China tariff negotiations.

However, today the Hang Seng Index (HSI) has dropped towards the 23,100 level, which may be explained by fading optimism that dominated the market a day earlier.

According to Reuters, Christopher Hodge, Chief Economist at investment bank Natixis, stated that “these talks will yield nothing of long-term value. Ultimately, tariffs will still be significantly higher and will weigh on US economic growth.”

Technical Analysis of the Hang Seng Index (HSI) Chart

Price movements are forming an upward trend channel (marked in blue), with the following features:

→ The price is situated in the upper half of the channel (a sign of demand), and the upper boundary appears to act clearly as resistance;

→ Yesterday’s reversal suggests that bears became active above the former support area near the 23,385 level.

In this context, it is reasonable to assume that the Hang Seng Index (Hong Kong 50 on FXOpen) may test the support zone formed by the psychological level of 23,000 and the median line of the ascending channel. If the fundamental backdrop gives markets more reasons for caution, a deeper correction towards the lower boundary of the blue channel cannot be ruled out.

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Markets

Substantial progress in the trade negotiations with China this weekend in Switzerland as touted by the US administration triggered an impressive reflationary move of global markets. Both US and most other core bond yields jumped sharply higher in an impressive bear steepening move. US yields rose between 11.9 bps (2-y) and 7.1 bps (30-y). Markets scaled back expectations on Fed easing this year from 75 bps last week tot about to 50 bps eoy. A first rate cut also is pushed to the September meeting rather than July as expected before last week’s Fed meeting. Fed Chair Powell at least can consider his reactive rather than a proactive approach fully validated by the administration U-turn on tariffs. With the Trump administration still working on deregulation and tax cuts, the case for a higher-for-long approach is strengthened even further. Of course, further down the road, the Fed still might come in a position to ease policy as the impact of current uncertainty on growth at some point still might filter through. However, the timing probably will be later rather than sooner and isn’t the focus of the market momentum at this stage. European/German bonds even slightly underperformed especially at the short end of the curve, with German yields adding between 12.8 bps (2-y) and 6.2 bps (30-y), safe haven bunds understandably underperforming swaps. Of late, the impact of the trade war on Europe was assessed as outright deflationary by at least part the ECB MPC members. In case of a further de-escalation and/or progress in EU-US trade talks, this argument might lose some weight, too. ECB hawks recently at least become a bit more vocal with Isabel Schnabel this weekend and Buba president Nagel but also Spanish Member Escriva to some extent joining the idea that current volatile environment might be a good reason not to overreact to short term developments. European markets reversed recent bets for the ECB to cut rates below 1.75%. Especially US equity markets reacted euphorically with the Nasdaq (+4.35%) more than reversing the post-Liberation Day sell-off. The Eurostoxx 50 even is nearing the cycle top reached early March. On FX markets, the dollar now is the preferred risk currency. DXY came with reach of the 102 barrier. EUR/USD briefly dropped below 1.11 (close 1.1086). USD/JPY (164.6 close) is nearing the 164.9/166.7 range top).

Markets today might gradually look for a new equilibrium after yesterday’s sharp repositioning. US equity futures, US yields and the dollar this morning are ceding marginal ground. Regarding the data, ZEW economic sentiment deserves some attention. In the US, we look for the NFIB small business sentiment and even more for the US April CPI. Markets will look whether some tariffs related prices rises already are filtering through. Consensus expects 0.3% M/M both for headline (2.4%Y/Y ) and core inflation (2.8% Y/Y). An upward surprise might only reinforce Powell’s reactive approach. Such a scenario might support the rise in yields, but probably won’t be good news for the risk rally. The impact on the dollar also might be more mixed. However, it’s too early to anticipate on a genuine trend reversal on yesterday’s repositioning.

News & Views

UK retail sales rose by 6.8% Y/Y in April, rising from 0.9% in March and beating consensus estimates (2.3%). The British Retail Consortium pointed out that Easter falling in April rather than March artificially lifted sales (and weighed on growth in March). The sunniest April on record also provided a boost to sales. Food sales increased 8.2% Y/Y while non-food revenues rose by 6.1% Y/Y. BRC CEO Dickinson nevertheless warned for clouds on the horizon as “new costs begin to bite”. She refers to an estimated £7bn of costs to the industry coming from higher Employer National Insurance Contributions, the higher National Living Wage and a new packaging tax.

Bulgarian President Radev filed a request to parliament to organize a referendum on euro adoption. The proposed referendum question "Do you agree to have Bulgaria adopt the single European currency euro in 2026?" will test the democracy and provide an opportunity to hear all the arguments for and against the monetary policy move. The politically loaded push comes as the country waits the June 4 publication of convergence reports by the EC and the ECB and against the background of a divided political and societal landscape. A similar request for euro referendum was filed by the far-right pro-Russian Revival party and eventually rejected by the country’s constitutional court. Interior minister Mitov called the referendum “a clear act of sabotage against the introduction of the euro in Bulgaria” with PM Zhelyazkov urging lawmakers to ignore the President’s request.

Daily Pivots: (S1) 194.22; (P) 195.02; (R1) 196.40; More...

Intraday bias in GBP/JPY remains on the upside for the moment. Current rise from 184.35 is in progress and break of 195.95 resistance will suggest that whole choppy decline from 199.79 has completed. On the downside, below 193.48 minor support will turn intraday bias neutral again first.

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) 163.86; (P) 164.39; (R1) 165.15; More...

EUR/JPY's rally from 154.77 resumed by breaking 164.61 resistance and intraday bias is back on the upside. Further rally should be seen to 166.67 resistance. For now, risk will stay on the upside as long as 161.57 support holds, in case of retreat.

In the bigger picture, price actions from 175.41 are seen as correction to rally 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) 0.8394; (P) 0.8426; (R1) 0.8447; More...

Intraday bias in EUR/GBP remains on the downside for the moment. Current development suggests that whole rebound from 0.8221 has completed as a corrective move. Further decline should be seen back to 0.8221/8239 support zone. For now, risk will stay on the downside as long as 0.8539 resistance holds, in case of recovery.

In the bigger picture, the extended decline from 0.8737 dampened the original bullish view. While a medium term bottom was in place at 0.8221, price actions from there could be a corrective pattern only. Larger down trend from 0.9267 (2022 high) might still be in progress. Sustained trading below 55 W EMA (now at 0.8438) will turn favor to this bearish case.

Daily Pivots: (S1) 1.7303; (P) 1.7409; (R1) 1.7506; More...

EUR/AUD's fall from 1.8554 resumed by breaking through 1.7380 and intraday bias is back on the downside. Sustained trading below 55 D EMA (now at 1.7431) will target 61.8% retracement of 1.5963 to 1.8554 at 1.6953 next. On the upside, break of 1.7628 resistance is needed to indicate short term bottoming. Otherwise, risk will stay on the downside in case of recovery.

In the bigger picture, as long as 1.7062 resistance turned support (2023 high) holds, up trend from up trend from 1.4281 (2022 low) should still be in progress. However, sustained break of 1.7062 will confirm medium term topping and bring deeper fall back to 1.5963 support.

Daily Pivots: (S1) 0.9346; (P) 0.9370; (R1) 0.9401; More....

Intraday bias remains neutral in EUR/CHF as sideway trading continues. On the upside, above 0.9445 will resume the rebound from 0.9218, either as a corrective move or the third leg of the pattern from 0.9204. However, break of 0.9274 will suggest that that recovery has completed, and bring retest of 0.9204/18 support zone.

In the bigger picture, prior rejection by long-term falling channel resistance (now at 0.9548) 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.