Key events today:

06.08 08:30 UTC: GBP – Construction PMI.

06.08 14:30 UTC: USD – Crude Oil Inventories from the Department of Energy.

06.08 16:45 UTC: USD – FOMC member Mary Daly to speak.

The pound remains under pressure ahead of tomorrow’s Bank of England decision: consensus expects the rate to be kept at 5.25%, but the market is pricing in only one or two moderate cuts by the end of the year, reflecting a slowdown in inflation to 2.6% alongside a 0.9% m/m drop in June retail sales.

Additional pressure comes from fiscal risks: the UK Treasury has warned of the need to cut spending by GBP 4 billion in 2026 to keep the deficit at the target level of 3% of GDP. This increases stagflation concerns and limits the pound’s upside potential.

The dollar is supported by inflows into US yield assets: the 10-year Treasury yield rose to 4.47%, while the spread with 10-year gilts widened to 155 bps, a level that has historically correlated with GBPUSD weakness.

Recommendations: SELL 1.3285, SL 1.3305, TP 1.3180.