Forex News
- NZD/USD rallies on Monday despite the risk-off mood and tests monthly highs at 0.5860.
- Fed/RBNZ monetary policy divergence is supporting the Kiwi.
- Technical indicators point to an overstretched rally.
The New Zealand Dollar (NZD) resumed its broader bullish trend against the US Dollar (USD) on Monday, following a mild pullback over the previous two trading days. Bulls are pushing against the resistance area between 0.5860 and 0.5865, so far unaffected by the risk-off mood amid the hostilities in Iran.
The Kiwi Dollar has been drawing support from the favourable monetary policy divergence between the US Federal Reserve (Fed) and the Reserve Bank of New Zealand (RBNZ). New Zealand’s central bank hiked interest rates earlier in July and hinted at further tightening in the coming months, while, in the US, the soft inflation figures seen last week have dampened hopes of a rate hike in the near term.
This, so far, is offsetting the negative impact on the risk-sensitive Kiwi from the escalating tensions between the US and Iran and the surging Crude Oil prices.
Technical Analysis: Indicators hint at an overstretched rally
NZD/USD trades at 0.5862, holding a constructive near-term bias as it clings to gains above the reclaimed ascending trend-line support. The 4-hour Relative Strength Index (14), near 70, shows overbought conditions, and the Moving Average Convergence Divergence (MACD) has started to soften, hinting that upside strength might be losing momentum.
On the topside, bulls are pushing against the mentioned resistance area ahead of 0.5865 (June 15, July 15 highs). Further up, a previous support-turned-resistance, around 0.5910 (June 1 low), looks a plausible target.
A bearish reaction, on the contrary, is likely to be tested at the trendline support, now around 0.5835, ahead of Friday's low at 0.5825. A deeper pullback might look for support at the July 10 and 13 highs, just below 0.5800.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.19% | -0.02% | -0.05% | -0.26% | -0.27% | -0.09% | |
| EUR | 0.04% | -0.12% | 0.02% | -0.02% | -0.21% | -0.25% | -0.05% | |
| GBP | 0.19% | 0.12% | 0.15% | 0.10% | -0.10% | -0.12% | 0.04% | |
| JPY | 0.02% | -0.02% | -0.15% | -0.02% | -0.24% | -0.22% | -0.09% | |
| CAD | 0.05% | 0.02% | -0.10% | 0.02% | -0.21% | -0.19% | -0.07% | |
| AUD | 0.26% | 0.21% | 0.10% | 0.24% | 0.21% | 0.00% | 0.18% | |
| NZD | 0.27% | 0.25% | 0.12% | 0.22% | 0.19% | -0.01% | 0.14% | |
| CHF | 0.09% | 0.05% | -0.04% | 0.09% | 0.07% | -0.18% | -0.14% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
- The Euro holds the recovery move near 1.1450 against the US Dollar.
- The ECB and the Fed are expected to leave interest rates unchanged in the July meeting.
- Escalating Middle East tensions continue to weigh on market sentiment.
The Euro (EUR) holds its early recovery move at around 1.1450 against the US Dollar (USD) during the European trading session on Monday. The major currency pair rebounds as the US Dollar turns upside down amid firm expectations that the Federal Reserve (Fed) will keep interest rates steady in the July policy meeting.
At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.1% lower to near 100.65.
According to the CME FedWatch tool, the odds of the Fed leaving interest rates unchanged in the July meeting are 85.6%, up from 65.8% recorded last week. Traders scaled back hawkish Fed expectations after the release of the softer-than-expected United States (US) Consumer Price Index (CPI) data for June.
Though the Euro trades higher against the US Dollar, the former is underperforming against its other peers amid escalating geopolitical tensions. US Central Command (CENTCOM) confirmed late Sunday that it had concluded a ninth straight night of strikes against Iran, clarifying that the latest aggression was in retaliation for the killing of at least three American service members.
This week, the major trigger for the Euro will be the European Central Bank’s (ECB) monetary policy announcement on Thursday. The central bank is expected to leave policy rates unchanged after raising them by 25 basis points (bps) in the June meeting. Investors will pay close attention to the ECB’s monetary policy statement and President Christine Lagarde’s speech to get fresh cues regarding the monetary policy outlook.
Economic Indicator
ECB Rate On Deposit Facility
One of the European Central Bank's three key interest rates, the rate on the deposit facility, is the rate at which banks earn interest when they deposit funds with the ECB. It is announced by the European Central Bank at each of its eight scheduled annual meetings.
Read more.Next release: Thu Jul 23, 2026 12:15
Frequency: Irregular
Consensus: 2.25%
Previous: 2.25%
Source: European Central Bank
Societe Generale technical analysts highlight that USD/CAD failed to sustain a break above 1.4130, triggering a deeper pullback. The pair is drifting towards the 50-DMA and March peak near 1.3970, seen as key support. A rebound could face resistance at 1.4150/1.4175, while a break below 1.3970 would expose the May high around 1.3870/1.3850.
Key support at 1.3970 under scrutiny
"USD/CAD failed to hold above the upper band of its previous broad consolidation range at 1.4130, resulting in a deeper pullback."
"The pair is gradually drifting towards the 50-DMA, the March peak around 1.3970 could be a potential support."
"It will be important to monitor whether the pair can maintain above the 50-DMA."
"If a short-term rebound materializes, last week's high at 1.4150/1.4175 may act as an interim resistance."
"Failure to defend 1.3970 could extend the decline towards the May high around 1.3870/1.3850."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- EUR/CAD holds losses as the Euro weakens following the release of Germany's Producer Price Index data.
- Monthly German PPI fell a steeper-than-expected 0.3%, reversing May's gain for the first drop since February.
- The Canadian Dollar gains as oil prices rise amid escalating US-Iran hostilities, sparking global supply disruption concerns.
EUR/CAD remains in negative territory after paring daily losses, trading around 1.6030 during the early European hours on Monday. The currency cross depreciates as the Euro (EUR) struggles following the release of Germany’s Producer Price Index (PPI) data.
German PPI rose 1.8% year-over-year (YoY) in June, continuing a three-month trend of producer inflation. However, growth cooled from May’s peak of 2.2%, the highest annual increase since May 2023. On a monthly basis, producer prices dropped 0.3%, reversing May’s 0.3% gain and marking the first monthly decline since February. The drop was slightly steeper than the 0.2% decline markets had expected.
The EUR/CAD cross loses ground as the commodity-linked Canadian Dollar (CAD) receives support from higher oil prices. Any change in oil prices could impact CAD as Canada is one of the largest crude exporters.
Crude oil prices have gained significantly as escalating hostilities between the United States (US) and Iran raise fears of further disruptions to vital oil flows from the Middle East. Oil prices have surged nearly 20% in July as the interim peace agreement between the US and Iran unraveled, the US resumed its blockade of Iranian ports, and Tehran intensified its attacks on shipping vessels near the Strait of Hormuz.
The US has launched its ninth consecutive night of strikes against Iranian targets. In response, Iranian officials declared that the ceasefire between the two nations has been effectively abandoned, opening the door for deepening disruptions to crucial energy pathways through the region's narrow waterways.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- Silver attracts some buyers for the second consecutive day.
- The upside remains capped near the falling wedge hurdle.
- Failures near the 200-SMA on H4 favor bearish traders.
Silver (XAG/USD) sticks to its modest intraday gains during the early European session on Monday and currently trades just below the $57.00 mark, up over 1.50% for the day. The white metal, however, remains within striking distance of its lowest level since December 2025, around the $54.80-$54.75 region touched on Friday, amid a mixed technical setup.
The price action between two converging trend-lines constitutes the formation of a bullish reversal pattern – falling wedge – on the 4-hour chart. However, repeated failures to make it through the 100-period Simple Moving Average (SMA) on the said chart favor the XAG/USD bears. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram has turned modestly positive, hinting at a mild recovery attempt. However, the Relative Strength Index (RSI) around 45 still points to only tentative demand after a prior oversold phase.
On the topside, initial resistance is located at the reclaimed break area of the descending trend line near $57.24, where prior rallies have been rejected. The subsequent hurdle emerges at the 100-period SMA around $58.98, which reinforces the broader bearish structure. Unless bulls can force a sustained move above these caps, the XAG/USD is likely to remain vulnerable to renewed selling on intraday rebounds, with downside levels to be defined by fresh price action, given the lack of nearby mapped supports in the current dataset.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
XAG/USD 4-hour chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Commerzbank’s Thu Lan Nguyen expects EUR/USD to see limited drivers from United States (US) data or Federal Reserve (Fed) communication this week, putting focus on the European Central Bank (ECB). With markets already pricing a September hike, she argues that how hawkish the ECB sounds on inflation and future tightening will be key for Euro performance and downside risks in EUR/USD.
ECB communication to shape Euro risks
"This week promises to be a quiet one for the EUR-USD exchange rate. As we have discussed here many times before, US monetary policy is currently the key driver of the currency pair. However, on the one hand, Federal Reserve officials do not comment publicly on the monetary policy outlook in the week before the Fed meeting."
"This is particularly the case if there is still no sign of the Strait of Hormuz being reopened and a further increase in energy prices is therefore looming. One thing should be clear: as long as the conflict continues, the data from recent months carry less weight."
"However, for the euro exchange rate over the coming weeks, it could indeed be crucial how hawkish the ECB presents itself. The more strongly it already now warns of inflation risks in light of a renewed escalation in the Middle East conflict, the more confident the market is likely to be not only about a rate move in September, but there is a high likelihood that it will tend to price in additional rate hikes."
"For the market, it is therefore crucial how clearly the ECB underscores that it is prepared to raise its key rate beyond September. This is likely to be decisive in limiting the downside potential in EUR-USD in the event of a further escalation in the US-Iran conflict."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Here is what you need to know on Monday, July 20:
Oil prices climb higher at the beginning of the week as there are no signs of a de-escalation of the crisis in the Middle East. In the second half of the day, Statistics Canada will publish the Consumer Price Index (CPI) data for June.
The United States (US) and Iran continued to exchange attacks over the weekend, ramping up the military aggression in the region. The US military announced that it completed its ninth consecutive night of strikes against Iranian command centers, defence sites, communication networks and missile facilities. In response, Iran targeted US military assets in Kuwait and Bahrain, while the Islamic Revolutionary Guard Corps reported that two oil tankers attempting to cross the Strait of Hormuz via an unsafe route had exploded and been immobilisied.
After rising nearly 15% in the previous week, the barrel of West Texas Intermediate (WTI) opened with a bullish gap and was last seen trading at its highest level in over a month above $83.50, up about 2.5% on a daily basis.
In the meantime, the US Dollar (USD) Index fluctuates in a narrow range below 101.00 following a two-day rebound to end the previous week, and US stock index futures trade little changed on the day.
US Dollar Price Last 7 Days
The table below shows the percentage change of US Dollar (USD) against listed major currencies last 7 days. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.37% | -0.62% | 0.37% | -1.06% | -0.75% | -1.66% | -0.11% | |
| EUR | 0.37% | -0.26% | 0.78% | -0.70% | -0.43% | -1.30% | 0.27% | |
| GBP | 0.62% | 0.26% | 0.98% | -0.44% | -0.19% | -1.05% | 0.57% | |
| JPY | -0.37% | -0.78% | -0.98% | -1.50% | -1.13% | -2.07% | -0.53% | |
| CAD | 1.06% | 0.70% | 0.44% | 1.50% | 0.39% | -0.57% | 1.00% | |
| AUD | 0.75% | 0.43% | 0.19% | 1.13% | -0.39% | -0.88% | 0.60% | |
| NZD | 1.66% | 1.30% | 1.05% | 2.07% | 0.57% | 0.88% | 1.63% | |
| CHF | 0.11% | -0.27% | -0.57% | 0.53% | -1.00% | -0.60% | -1.63% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
During the Asian trading hours, the People’s Bank of China (PBOC), China's central bank, announced that it left its Loan Prime Rates (LPRs) unchanged, with the one-year and five-year references holding at 3.00% and 3.50%, respectively. AUD/USD stays relatively quiet on Monday and trades marginally higher on the day, slightly below 0.7000.
Statistics New Zealand will release its quarterly Consumer Price Index (CPI) data in the early Asian session on Tuesday. NZD/USD clings to small gains near 0.5850 in the European morning on Monday.
EUR/USD trades flat on the day, slightly below 1.1450, after opening with a small bearish gap.
Andy Burnham is set to become the UK's seventh Prime Minister in a decade later in the day. Burnham is expected to appoint Shabana Mahmood, who is seen as someone who would support fiscal conservatism, as his finance minister. GBP/USD clings to small gains above 1.3450 to start the European session.
Gold holds slightly above $4,000 after losing about 2.5% in the previous week.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
BNY’s Geoff Yu notes that softer United States (US) inflation has eased pressure for a more hawkish Federal Reserve (Fed) path, shifting focus to S&P Purchasing Managers' Index (PMI) data for confirmation that growth remains resilient. With the Fed in a communications blackout, markets are expected to rely on activity indicators to balance cooling inflation against still-firm economic momentum for the Dollar and risk assets.
Cooling inflation and key PMI signals
"Last week’s softer-than-expected core CPI reinforced the view that U.S. inflation is cooling at the margin, easing some of the pressure on markets to price a more hawkish Fed path. Fed communication was active before the blackout period, but the speakers did not materially shift the policy backdrop. The BoC’s decision to hold rates steady kept the Canadian policy outlook on pause as well."
"With the Fed now in a communications blackout after last week’s speaker-heavy schedule, there is limited scope for policy repricing from central bank commentary alone."
"The most important data point this week is likely the U.S. PMI suite – not because it will supersede inflation in market importance, but because it offers a timely read on whether activity is holding up alongside easing price pressures. A Manufacturing PMI print around the expected 54.4 would point to continued expansion and help confirm that growth remains resilient even as inflation moderates. That combination could be constructive for risk sentiment but could leave rates markets caught between softer inflation and still-firm activity."
"The US faces the same test through Friday’s S&P PMIs, with manufacturing expected at 54.4. Markets need evidence that activity is holding up as inflation cools. Canada CPI matters for the Bank of Canada (BoC) pause story, but the U.S. growth signal is the cleaner global catalyst."
"Overall, this week will likely be quieter, with the broader rates narrative still anchored by the softer U.S. inflation tone established last week."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
- WTI Oil accelerates its rally on Monday, hitting fresh monthly highs above $84.00.
- US attacked Iran for the ninth consecutive day, and Tehran said that the Strait of Hormuz will remain closed until the US aggression ends.
- Concerns about a full-on war have triggered a 23% rally in oil prices over the last two weeks.
Oil prices jumped on Monday as US and Iran hostilities escalated, threatening an all-out war, which keeps the Strait of Hormuz closed for sea traffic. In this context, the barrel of the US Benchmark West Texas Intermediate (WTI) hit prices just above $84.00, although it trades in the $ 83.70 area at the time of writing.
The US military struck targets across Iran for the ninth consecutive day on Monday, following the death of another US soldier in Iraq, after two service members died in Jordan in attacks by Tehran.
Concerns of an all-out war are boosting Oil prices
The US-Iran conflict has escalated from a series of reciprocal attacks in recent weeks to a situation increasingly reminiscent of the full-on war that drove oil prices well below $100 in March and April.
Meanwhile, the Strait of Hormuz remains blocked, and the British maritime authority has reported a vessel on fire off the coast of Oman. Iranian Islamic Revolutionary Guard Corps (IRGC) warned the US to prepare for a “punitive operation”, and affirmed that “not even a single drop” of Oil will cross the strait until the US aggression continues
Against this background, WTI Oil has regained half of the ground lost after the ceasefire agreement, reached in May. The WTI barrel is now about 23% above the early July lows, and about 25% below the $113.28 high hit in March.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
- The British Pound bounces back against the Japanese Yen after a two-day correction.
- Investors brace for high volatility in the British Pound ahead of a data-packed week in the UK.
- The BoJ is expected to leave interest rates unchanged in the policy meeting next week.
The British Pound (GBP) snaps a two-day correction against the Japanese Yen (JPY) on Monday, rebounding to near 218.60 during the European trading session. The cross faced selling pressure in the past two trading days after profit-booking near multi-year highs at 219.61.
This week, the British currency is expected to remain highly volatile as a slew of United Kingdom (UK) economic data is scheduled to be published. In the data-pack week, investors will pay close attention to the employment data on Tuesday, Consumer Price Index (CPI) data on Wednesday, and Retail Sales and preliminary Purchasing Managers’ Index (PMI) data on Friday.
The impact of employment and inflation is expected to be significant on market expectations for the Bank of England’s (BoE) monetary policy announcement next week.
On Tuesday, the Office for National Statistics (ONS) will likely show that the ILO Unemployment Rate remained steady at 4.9%. Average Earnings Excluding Bonuses, a key measure of wage growth, is expected to have grown steadily by 3.4% Year-on-Year (YoY).
The UK core CPI – which excludes volatile components of food, energy, alcohol and tobacco – is estimated to have grown at a moderate pace of 2.5% against the previous reading of 2.6%.
Signs of inflationary pressures cooling down are likely to boost expectations of an interest rate cut by the BoE in the near term.
On the Japanese Yen front, the Bank of Japan (BoJ) is expected to leave interest rates unchanged at 1% in the policy meeting next week, according to a report from Kyodo. The report also showed that officials still see the need for back-to-back interest rate hikes in the near term.
Economic Indicator
Core Consumer Price Index (YoY)
The United Kingdom (UK) Core Consumer Price Index (CPI), released by the Office for National Statistics on a monthly basis, is a measure of consumer price inflation – the rate at which the prices of goods and services bought by households rise or fall – produced to international standards. The YoY reading compares prices in the reference month to a year earlier. Core CPI excludes the volatile components of food, energy, alcohol and tobacco. The Core CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.
Read more.Next release: Wed Jul 22, 2026 06:00
Frequency: Monthly
Consensus: 2.5%
Previous: 2.6%
Source: Office for National Statistics
The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.
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