Pound (GBP) wraps up July on the back foot
The pound (GBP) closed out Thursday’s session lower across the board, rounding off its weakest monthly showing in nearly two years.
Sterling’s continued descent was fuelled by lingering doubts about the UK’s fiscal credibility, as recent setbacks in policy and underwhelming economic indicators cast a shadow over the outlook for growth through the remainder of 2025.
Looking ahead, the pound could face fresh pressure today if the UK’s final manufacturing PMI for July confirms ongoing weakness in the industrial sector.
Euro (EUR) lifted by upbeat releases
A string of better-than-expected data gave the euro (EUR) a lift on Thursday, helping it to register gains against several rivals.
The single currency was initially supported by news that Eurozone unemployment remained at historic lows in June, with momentum building following stronger-than-forecast inflation data from Germany.
Attention now turns to the Eurozone’s preliminary CPI release. If July’s figures reveal a further drop in inflation, the euro may encounter renewed selling pressure.
US dollar (USD) steady as inflation surprises
The US dollar (USD) held firm yesterday, consolidating its recent advance amid typical end-of-month positioning.
The greenback found additional support from the core PCE price index, the Fed’s favoured inflation gauge, which came in hotter than expected in June.
All eyes today will be on the latest US non-farm payrolls. Signs of a softer labour market could bolster expectations for a Fed rate cut in September, potentially curbing USD demand.
Canadian dollar (CAD) supported by economic surprise
The Canadian dollar (CAD) ticked higher on Thursday, buoyed by a better-than-anticipated rise in national GDP for June.
However, the ‘loonie’ may face selling pressure today, following an announcement from US President Donald Trump that Canadian imports will now face a 35% tariff.
Australian dollar (AUD) dips amid dovish rate speculation
The Australian dollar (AUD) softened overnight, after a sharper-than-expected decline in input inflation prompted fresh speculation of further rate cuts from the Reserve Bank of Australia (RBA).
New Zealand dollar (NZD) weakens on confidence slump
The New Zealand dollar (NZD) also lost ground overnight, dragged down by a surprise drop in domestic consumer confidence in July.
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