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Inflation and interest rate data ahead

Daily Currency Update

The US Dollar continued its upward trajectory last week with solid US data and a higher 10-year Treasury yield offering support. The Euro has fallen for 8 consecutive weeks now vs. the Dollar. This week sees a lot of economic releases that could offer direction for currency markets.

Key Movers

After a quiet data week last week, we look ahead to key data points across the UK, EU, and US that could provide market volatility across the three major currencies.

Markets have brought down expectations of a 25bps rate hike on some signs of easing in inflation. Markets are predicting a 40% chance the ECB will opt to raise interest rates this week and roughly a 67% chance it will hike rates again this year. The European Central Bank will deliver a final decision on their potential 25bps rate hike this week, which may bring the deposit rate up to 4%.

In the UK this week we have labor market figures due tomorrow and GDP data for July due for release this Wednesday. This data should confirm market expectations of slowing growth in the UK.

This Wednesday we have US CPI figures with previous figures printing 3.2%. Markets will be watching closely for the inflation figure this week to get an indication as to how the Federal Reserve will move forward with the next interest rate decision. Markets believe they will pause at the next meeting although a 25-bps rate hike is still on the cards.



Expected Ranges

  • GBP/USD: 1.2450 - 1.2600 ▼
  • GBP/EUR: 1.1600 - 1.1720 ▲
  • GBP/AUD: 1.9350 - 1.9500 ▼
  • EUR/USD: 1.0650 - 1.0750 ▼