Above $100 and a Hawkish ECB — Flash PMIs This Morning Test Whether the Dollar Run Extends

Yesterday's currency recap

Buying dollars got materially more expensive — GBPUSD fell 0.45% as oil breaking $100 drove safe-haven flows; dollar buyers paid approximately £564 more per £250k; sellers benefited by the same.

The ECB held at 2.25% but delivered a hawkish signal — some policymakers reportedly discussed an immediate rate hike; markets now price approximately 90% probability of a September ECB hike; for businesses buying euros, the risk of rising eurozone borrowing costs has increased over the medium term.

UK gilt yields closed above 5% for the longest consecutive stretch in nearly two decades — markets are pricing persistent inflation and a higher-for-longer BOE rate path; the risk-off mood added to dollar demand and weighed on sterling regardless.

Buying Canadian dollars also got more expensive — GBPCAD fell 0.47%; CAD buyers paid approximately £1,180 more per £250k; sellers benefited; the loonie is benefiting directly from oil above $100 as a major energy exporter.

Today's GBP rates

Key data points

Click here for a calendar of upcoming economic events.

Our thoughts

Today's flash PMIs for the UK, eurozone and US are the key catalyst — they arrive against oil above $100 and with the FOMC and BOE both meeting next week.

EURUSD

Near term — 80% conviction, staying rangebound. The near-term trend remains rangebound — the rate has been oscillating through July and despite the continued bout of dollar strength, the July support continues to hold. Today's US PMI above consensus could reinforce the dollar's growth advantage and push the greenback towards this support level, making dollars more expensive for euro buyers; a miss provides brief relief. A Middle East de-escalation removing the safe-haven premium is the tail risk.

Medium term — 78% conviction, stronger dollar. The six-month trend is range-bound but macro divergence is pulling it lower — the US economy is growing more than five times faster than the eurozone, the dominant scorecard factor. A sharp fall in oil prices narrowing the inflation premium is the tail risk.

What this means for you. If the euro falls to its June low, buying $250k costs approximately £1,150 more per €250k — sellers benefit by the same. If it recovers to resistance, buying $250k costs approximately £3,900 less — sellers are worse off.

GBPUSD

Near term — 65% conviction, stronger dollar. The near-term trend is lower — the pound has been making lower peaks and lower troughs since mid-July. Markets now price a Fed September hike and the pound is approaching its 2026 low — dollar buyers face a more expensive rate if that level is reached. A hawkish BOE surprise on 30 July is the tail risk.

Medium term — 45% conviction, lean toward stronger dollar. The medium-term trend is mixed — the pound has rallied this year but pulled back without establishing a new direction. The BOE's hawkishness is sterling's structural anchor but the Fed's September hike expectation and Middle East safe-haven flows are the dominant near-term forces. A BOE rate hike next Thursday is the tail risk that sharply reverses the near-term move.

What this means for you. If sterling falls to its 2026 low, buying $250k costs approximately £2,850 more per £250k — sellers benefit by the same. If sterling recovers to May/June resistance, buying $250k costs approximately £4,600 less — sellers are worse off.

GBPEUR

Near term — 45% conviction, lean toward stronger pound. The near-term trend is mixed — the pound hit its 2026 high against the euro earlier this month then pulled back without establishing a new direction. The BOE holds on 30 July, supporting sterling relative to the euro; the ECB's hawkish signal yesterday narrows but does not close the rate advantage argument. A UK fiscal deterioration is the tail risk.

Medium term — 50% conviction, lean toward stronger pound. The six-month trend is higher — the pound has been making higher peaks and higher troughs against the euro since January and that pattern remains intact. UK rates run above eurozone equivalents and the BOE remains the most hawkish major central bank; the ECB's approximately 90% September hike probability narrows but does not close that divergence. A UK fiscal shock or ECB hike closing the rate gap faster than expected is the tail risk.

What this means for you. If sterling falls to the prior resistance-turned-support level, buying €250k costs approximately £1,650 more per £250k — sellers benefit by the same. If sterling reaches the 2026 high, buying €250k costs approximately £2,500 less — sellers are worse off.

GBPCAD

GBPCAD fell 0.47% yesterday — CAD buyers paid approximately £1,180 more per £250k; sellers benefited; the oil tailwind for the loonie is likely to persist while the conflict continues.

Bottom line

The dollar is our highest-conviction call — EURUSD at 80% near-term is the strongest view on the board. Retail sales at 07:00 and PMIs through the morning are the tests today. FOMC Wednesday and BOE Thursday next week set the direction for the rest of the month.

How we can help

Our team of currency experts are here to help you get more from your money when making international payments. We will work with you to understand your payment needs and offer specialised guidance on the best options available to you. Over the last 20 years we've helped over a million customers and last year alone processed over £12bn. We're tried and trusted, and we're ready to help you.

Get in touch with our team today on 020 7778 7500 or email dealingdesk@equalsmoney.com.