Pound Sterling (GBP)
The Pound continues to weaken as the UK’s economic outlook deteriorates. Business confidence has plummeted, with declining expectations for hiring, investment, and revenue. Concerns are growing about possible tax increases in the autumn budget and potential interest rate cuts, both of which could put further pressure on the currency. Ongoing inflation and stagnant growth are fuelling fears of stagflation, making investors more cautious about the Pound, especially compared to the Euro and the U.S. Dollar.
EURO (EUR)
The Euro is under strain despite briefly strengthening when Germany’s inflation data came in steady. Falling inflation across the Eurozone has increased speculation that the European Central Bank may cut rates, which has weakened the currency. While Q2 economic growth slightly exceeded expectations, wider concerns—such as trade tensions with the U.S.—continue to drag on the Euro. As a result, EUR/USD is heading for a nearly 3% decline in July, with further downside risk due to continued Dollar strength.
U.S. Dollar (USD)
The Dollar is having its strongest month in 2025 so far, rising over 3% in July. This strength is driven by better-than-expected GDP and job market data. Despite political pressure and calls for lower rates, Fed Chair Jerome Powell has stayed firm, signalling no immediate rate cuts. With markets now looking ahead to the upcoming jobs report, the Dollar remains supported by solid economic fundamentals and the expectation that interest rates will stay higher for longer.