Published: 22/07/2026 By ECAP
BREATHING SPACE
The British Pound weakened after UK inflation cooled more than expected in June, increasing expectations that the Bank of England will leave interest rates unchanged in the near term. Softer price growth, driven by lower petrol and transport costs, reduced support for the Pound. Many in the market are now focused on upcoming UK retail sales and PMI data for further insight into inflation, economic activity and the central bank’s policy outlook.
The Euro found support after German economic sentiment improved by more than expected in July, boosting confidence in the region’s outlook. Stronger optimism in the bloc’s largest economy encouraged investors, helping underpin the single currency. Attention now turns to the European Central Bank’s policy outlook, with markets watching upcoming economic data to assess whether improving sentiment is matched by broader resilience across the region.
The US Dollar remained supported by cautious market sentiment, with investors favouring the safe-haven currency amid lingering geopolitical uncertainty. Expectations that the Federal Reserve will maintain a relatively restrictive monetary policy also underpinned demand. Looking ahead, markets will focus on comments from Fed policymakers and upcoming US economic data for further clues on the interest rate outlook and economic resilience.
Data supplied by GC Partners