GBP/USD Rallies, EUR/USD Holds Support as Fed Hawks

GBP/USD outperformed, recovering from the 1.3160–1.3200 support zone and climbing toward 1.3400. Short-term buying interest remains intact. A sustained move above 1.3400 could allow a push toward 1.3460–1.3500. A break below 1.3320 would invalidate the bullish view.

The hawkish Fed minutes widened the rate differential between the US and the eurozone, putting pressure on the euro. The ECB has maintained a more dovish stance than the Fed, which weighs on the euro. Any further escalation in the Middle East could push oil prices higher, adding to inflation concerns and reinforcing the dollar's strength. The pound has shown resilience, supported by expectations that the Bank of England will be slower to ease than the Fed. Traders have trimmed bets on BOE cuts, giving sterling a boost.

The next scheduled event for the Fed is the July 30–31 meeting. Until then, the dollar's direction will depend on incoming data and developments in the Middle East. A sustained break above 1.3400 in cable would open the path to 1.3500. A loss of 1.1390 in the euro would expose the June lows.