GBPUSD: BUY 1.3440, SL 1.3380, TP 1.3575 | 21 July 2025

GBPUSD:

Sterling is stabilising near 1.3440 after an extended sell‑off, aided by robust labour‑market data: average weekly earnings including bonuses grew 6.1 % y/y and unemployment held at 4 %. The Bank of England signalled that policy easing will be discussed only if employment cools markedly, effectively shutting the door on immediate rate cuts and supporting the pound.

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The external backdrop also favours further gains. Uncertainty over US tariff plans could weaken near‑term dollar demand if Washington misses its 1 August deadline for bilateral agreements. Meanwhile, London is promoting a tech‑and‑defence partnership with the US, reducing pressure on UK exporters and attracting inflows into GBP‑denominated assets.

The 10‑year Gilt‑UST yield gap has narrowed to –75 bp, well above the January trough (‑95 bp), improving the relative appeal of UK bonds. A close above 1.3500 would trigger hedge‑fund demand, and lingering dollar softness, hinted at in the latest FOMC minutes, leaves scope for a run towards 1.3575. A protective stop is placed at 1.3380, just below last week’s intraday pivot.

Trade idea: BUY 1.3440, SL 1.3380, TP 1.3575

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