Key Economic Data and Political Moves Set to Drive FX Markets This Week

Interest Rates & Inflation

Region	Interest Rate	Inflation
UK	4.00%	3.6%
EU	2.15%	2.0%
US	4.50%	2.7%

Last week in FX markets: The pound experienced notable volatility, with GBP/USD edging higher amid firmer UK data suggesting an uptick in economic resilience. Stronger-than-expected inflation and employment signals helped buoy Sterling against the US dollar, as markets began pricing in the potential for monetary support. Meanwhile, GBP/EUR saw choppy trading, with the pound finding temporary strength on the back of hawkish Bank of England commentary, only to be met by a firmer euro following solid eurozone growth signals and dovish cues from ECB observers.

UK

Key Data Releases This Week

• Tuesday 12th – ILO Unemployment Rate
  Measures the percentage of unemployed people in the workforce.
  Previous: 4.7% | Consensus: 4.7%
  • A higher rate signals a weaker jobs market and can weigh on GBP.
  • A lower rate suggests stronger economic growth, which could support GBP.
• Thursday 14th – Gross Domestic Product (GDP)
  The broadest measure of UK economic activity.
  Previous YoY: 1.3% | Consensus: N/A
  Previous MoM: -0.1% | Consensus: 0.2%
  • Stronger GDP figures tend to boost GBP as they point to a healthier economy attracting more investment.

Eurozone

• Thursday 14th – Gross Domestic Product (GDP)
  Previous YoY: 1.4% | Consensus: N/A
  • A robust reading is likely to strengthen the Euro; weaker numbers could have the opposite effect.

United States

• Tuesday 12th – Consumer Price Index (CPI)
  Key measure of inflation.
  Previous: 2.7% | Consensus: 2.8%
  • If inflation rises as expected, it may strengthen the USD by increasing pressure on the Federal Reserve to keep interest rates elevated.
• Thursday 14th – Producer Price Index (PPI) ex. food & energy (YoY)
  Tracks price changes from the perspective of producers.
  Previous: 2.6% | Consensus: N/A
  • Higher PPI often translates into higher consumer prices, which can push the USD higher.
• Friday 15th – Retail Sales
  Reflects consumer spending, a key driver of the US economy.
  Previous YoY: 3.9% | Consensus: N/A
  Previous MoM: 0.6% | Consensus: 0.5%
  • Strong figures are typically positive for the USD.

Key Market Updates

• UK Chancellor Rachel Reeves is expected to raise taxes in the Autumn Budget to address a £41bn shortfall while keeping within borrowing rules.
• UK interest rates are now at their lowest in over two years.
• Reports suggest the US and Russia are exploring a deal to halt the war in Ukraine, with talks scheduled for 15th August in Alaska.
• The US is considering a policy to exempt imported gold bars from tariffs.
• Former President Trump has proposed a 10% global minimum tariff and a 25% tariff on India, citing concerns over its energy trade with Russia.
• Traders are betting the Federal Reserve will hold rates steady at its 18th September meeting.
• The European Union has acknowledged it cannot deliver the $600bn investment pledge made to the US economy.

Why this matters
This week’s data releases and political developments could create volatility in FX markets. Businesses and individuals with upcoming currency requirements should monitor these events closely, as even small movements in exchange rates can materially impact costs and profits. Our team can help you put strategies in place to protect against adverse moves and take advantage of opportunities.

📞 Call us on 020 3876 5432 or 📧 email [email protected] to discuss how we can support your currency needs this week.