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MARKETS
How’s your favorite today?
Prices supplied by Google Finance as of 4:00am ET - stock prices as of close. Here is what the prices mean.
MARKET ANALYSIS
The British Pound Just Flashed a Major Sell Signal — Are You Ready?
A few weeks ago, I wrote a piece talking about the positive surprises to the UK data, especially to GDP, Retail Sales and Employment. But all that has now changed.
We are now starting to see all those key data points shift lower as we begin to see substantial changes to pricing of cuts by the Bank of England.
If the GBP is getting weaker, which currencies could we take advantage of if against and why?
1. GBP Data Takes a Turn for the Worst
Over the past week we have seen some key economic drivers for the UK start to surprise lower. Some of these include:
· GDP Growth down to -0.3% from 0.2%.
· Goods Trade Balance -23.3B up from -19.9B.
· Industrial Production -0.6% vs the -0.4 forecast.
· Claimant Count Change 33.1 vs -21.1 previously.
· Core CPI 3.5% vs 3.8% previously.
As we can see some key data points are starting to miss lower, and this was reflected in the British Pounds pricing recently, as GBPUSD traded lower yesterday breaking key support points.
Upcoming data looks a little bleak too, retail sales on Friday is forecast to come in much lower at -0.5% vs the previous 1.2%.
2. Bank of England Rate Cut Expectations Rise
The Bank of England meet tomorrow to decide on the current interest rate, with forecasts suggesting practically no possibility of a rate cut is coming. However, odds of a rate cut in the next meeting (August) have climbed to nearly 80%.
This can also be seen in the bond markets, with UK02Y now trading at 3.88% vs the current interest rate of 4.25%.
The recent increase in payroll taxes could be the key driver behind the British Pounds poor form.
3. Currency Strength Meter Opportunities
If the GBP continues to weaken, we need to identify currencies that are getting stronger, as we know all forex markets trade in pairs.
The Australian dollar and New Zealand dollar stand out to me the most right now for bullish opportunities, and this is reflected by my analysis on my forex heatmap.
The currency strength meter pointed out GBPAUD, GBPNZD and GBPCAD for selling ideas, and GBPNZD has caught my attention.
Looking at the weekly chart of GBPNZD, we can see the price has broken through a key trendline support that formed form the lows in December of last year.
This weekly candle as it stands looks very negative, with the price trying to break through support and lows between 2.2300 – 2.2200.
A break below these levels could see the price trade down towards 2.1800.
Key Takeaways
The UK economic data is beginning to miss to the downside prompted traders to short GBP.
The Bank of England’s rate cut chances in August have risen substantially.
Currency strength meter analysis points to AUD, NZD and CAD as the stronger currencies to the GBP, with GBPNZD in particular looking very bearish.
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CRYPTO
BTC Not Budging Despite Fed FUD
Despite the central bank holding interest rates steady at 4.25%-4.50%, and signaling just two potential cuts this year, Bitcoin barely budged, hovering around $104,250 in the hour after the announcement. The underwhelming and unwavering response suggests crypto traders have grown accustomed to the Fed's cautious approach, even as political pressure mounts for more aggressive action.
This non-reaction is very notable given Bitcoin's typical sensitivity to liquidity expectations. Normally, any delay in rate cuts might be expected to weigh on risk assets. But BTC seems to be marching to its own drumbeat lately, trading just 5% below the all-time high it set less than a month ago. Ethereum mirrored Bitcoin's steady stance, while Solana eked out minor gains, a pretty modest show of resilience given altcoins' less than stellar month.
The U.S. Fed's decision comes amid surprisingly tame inflation data that might normally prompt a more dovish stance. Last week's CPI showed just a 0.1% monthly increase (2.4% annually), while April's PCE, the Fed's preferred inflation gauge, also rose a modest 0.1%. Yet Chair Jerome Powell remains characteristically wary, citing "highly uncertain" impacts from Trump's escalating trade wars and Middle East tensions. His comments suggest the Fed won't be rushed into cuts, despite the President's recent jab calling Powell "stupid" for not acting on "no inflation" from tariffs.
All this is happening with the backdrop of the Oil markets, underscoring these global uncertainties. Brent crude's 4% surge past $75/barrel this week, fueled by Middle East tensions, creates exactly the kind of inflationary wildcard that keeps central bankers up at night.
As Alice Liu of CoinMarketCap notes:
"If Powell emphasizes inflation risks, Bitcoin could test $91,500 support."
But with the incredibly neutral stance, that downside scenario appears avoided for now.
What's perhaps most telling is how Bitcoin's reaction differs from traditional markets. While stocks often hang on every Fed nuance, crypto seems increasingly focused on its own ecosystem developments, ETF flows, institutional adoption, and the upcoming halving's supply shock.
As deVere Group's Nigel Green pointed out:
"The data points in the right direction—but we're not there yet."
Bitcoin investors, it seems, are playing the long game. A really long game.
Gif by Dashpay on Giphy
The big question now is whether this calm holds. With September potentially marking the next cut opportunity, and summer trading volumes typically lighter, crypto may be in for a period of consolidation. But if today's unfazed reaction proves anything, it's that Bitcoin's maturation continues—no longer just a speculative asset, but one increasingly judged by its own fundamentals rather than Fed whims.
The market's overall ‘meh’ response to this news becomes even more interesting when you consider the bigger picture.
As an investor, keep your eyes peeled on the following:
Institutional Behavior Changes the Game:
With spot Bitcoin ETFs now acting as a shock absorber, we're seeing less panic selling on macro news. Over $1B flowed into these products last week alone, creating underlying demand that counterbalances trader nervousness.
Supply Squeeze Already in Play:
Even with the next halving years away, Bitcoin's liquid supply is tightening now. Exchange reserves recently hit 5-year lows as long-term holders accumulate, with over 70% of circulating supply untouched for 6+ months.
Political Theater vs. Economic Reality:
While Trump's Fed-bashing makes headlines, crypto markets seem to recognize that Powell's team will move when the data says so, not when politicians demand it. This maturity in interpreting central bank signals is new for crypto.
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ANSWER
Answer: Crude Oil $BZG23 ( 0.0% )
