Friday was an overall quieter day after a heavy week. USD took a bit of a breather but is still holding firm after decent data earlier in the week. Dollar Index dipped slightly but remained up on the week — the second straight weekly gain. Citi and others are now calling the bottom on the dollar selloff (for now at least) and perhaps we are in for a phase of consolidation.
GBPUSD edged higher through the European session and towards the upper end of the July downtrend channel, but the pair still finished lower on the week.
Not much new to go on from the UK side — BoE cut chatter is cooling a bit after sticky inflation and jobs weakness. Markets have gone back to only expecting two rate cuts this year.
*Daily move - against G10 rates at 7:00 am, 21.07.25
** Indicative rates - interbank rates at 7:00 am, 21.07.25
This week in the FX world is all about the ECB meeting on Thursday, where no rate change is expected but markets will be watching closely for any shift in tone or mention of Trump’s looming EU tariff threats - EUR volatility is likely to spike. US flash PMIs on Tuesday and Fed minutes on Wednesday will steer the dollar, especially if the data confirms the “higher for longer” narrative.
Over in the UK, flash PMIs on Thursday and retail sales on Friday will be the key events for GBP, with soft prints likely to revive BoE rate cut chatter. Overall, expect the USD to stay supported, EUR to trade cautiously into Lagarde’s press conference, and GBP to stay rangebound until data at the end of the week gives it direction.
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