Fundamental Market Analysis for July 2, 2026 GBPUSDBritish Pound/US DollarSAXO:GBPUSDFresh-Forexcast2004For sterling, the key recent risk remains uncertainty over fiscal policy during the country’s leadership transition. The new defence plan has left a GBP 4.7 billion funding gap, and the market must still assess whether it will be covered through spending cuts, additional borrowing, or tax measures. This uncertainty is limiting demand for UK assets. Domestic data are not providing sterling with reliable support. House prices were unchanged in June after declining in May, while mortgage approvals had previously recorded their sharpest fall since late 2023. The Bank of England kept its interest rate at 3.75% in June, and softer household inflation expectations may reduce the need for further tightening in financial conditions. Against this backdrop, the US dollar remains supported by US Treasury yields and Federal Reserve interest rate expectations. US employment data may alter this factor, but until their release, the difference in the market’s assessment of the resilience of the US and UK economies remains unfavourable for sterling. The base case for GBPUSD points to further downside in the absence of clarity on UK public finances. Trading idea: SELL 1.32800, SL 1.33100, TP 1.31900