Currency news / August 21, 2025

GBP fails to hold gains

3 min read Thanim Islam

Thanim IslamAugust 21, 2025

Market snapshot:

UK stagflation concerns to be highlighted further?
Fed more concerned about inflation than job market

Yesterday's currency recap

GBP struggled to hold onto initial gains following the upside surprise on CPI yesterday morning. The fall in GBP is very telling and it shows markets are concerned about the economy's slowing backdrop. Furthermore, today’s CPI numbers are adding to stagflation worries. UK 10-year yields suffered their biggest drop in a month. The UK has the highest inflation in the G7 and is lagging behind, France, Germany and the US with regards economic productivity.

USD was volatile over the afternoon, after Trump called on Federal Reserve Governor Lisa Cook to resign, citing Federal Housing Finance Agency Director Bill Pulte’s allegations regarding a pair of Cook’s mortgages.

The FOMC minutes in the evening revealed that more Fed members saw inflation risks outweighing job market concerns.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	0.07%	2.092
GBPCAD	-0.25%	1.8665
GBPCHF	-0.63%	1.0828
GBPDKK	-0.28%	8.6223
GBPEUR	-0.28%	1.155
GBPJPY	-0.54%	198.171
GBPNOK	-0.67%	13.7749
GBPNZD	0.09%	2.3093
GBPSEK	-0.29%	12.9071
GBPUSD	-0.18%	1.3468

*Daily move - against G10 rates at 7:00 am, 21.08.25
** Indicative rates - interbank rates at 7:00 am, 21.08.25

Key data points

Currency	Event	Period	Consensus	Previous
EUR	Manufacturing PMI	Aug	49.50	49.80
EUR	Services PMI	Aug	50.80	51.00
EUR	Composite PMI	Aug	50.60	50.90
GBP	Manufacturing PMI	Aug	48.30	48.00
GBP	Services PMI	Aug	51.80	51.80
GBP	Composite PMI	Aug	51.60	51.50
USD	Manufacturing PMI	Aug	49.70	49.80
USD	Services PMI	Aug	54.20	55.70
USD	Composite PMI	Aug	53.50	55.10
USD	Initial Jobless Claims	Aug	225,000	224,000

What we think

Today we have the first gauge of economic activity in August with focus on the UK numbers and whether they add further concerns about the economy or not. Markets are expecting the composite number to show further expansion across services and manufacturing, suggesting a miss could add to further decline on GBP thus adding to stagflation concerns.

EU and US numbers suggest a slowdown in activity.

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