EU/US trade talks are on the brink of collapse. Brussels is preparing for a potential no-deal outcome before the 1 August deadline. The UK grapples with rising unemployment and weak wage growth but there is respite for the pound which is holding firm near $1.34. All this and more in this week’s IFX Market Update.
Current rates
| Currency pair | Rate |
|---|---|
| eur usd | 1.1641 |
| gbp eur | 1.1543 |
| gbp usd | 1.3441 |
Rates correct as of 09:30am on Monday 21 July but may now have changed.
The Big 3
Three stories covering the latest developments in economies, currencies and borders.
EU makes plans for possible ‘no-deal’ scenario with Trump
EU officials are preparing contingency measures in case trade talks with the US collapse ahead of the August 1 deadline. Despite a strong preference to keep negotiations alive, little progress was made during recent meetings in Washington. Reports suggest the US is pushing for sweeping tariffs above 10% on most EU goods, with limited exemptions for key sectors. The European Commission declined to comment on the ongoing talks.
UK jobs market weakens as unemployment rate rises
Under pressure from a cooling labour market, the Bank of England is facing growing calls to cut interest rates at its August meeting. Unemployment has climbed to 4.7% – the highest since 2020 – while wage growth is losing pace, slowing to 5% in the latest figures. Job vacancies continue to decline, marking three years of contraction. BoE Governor Andrew Bailey has signalled that weakening employment data could justify a sharper rate cut. A move from 4.25% to 4% is now widely expected, though concerns remain over easing policy while inflation lingers.
[BBC]
GBP/USD rises again, but downtrend still in play
GBP/USD has edged up for a second consecutive session, trading near 1.3420 in early Monday trading. Despite this, the pair remains technically constrained within a downward channel, suggesting a cautious outlook. Strong US retail sales and a dip in jobless claims last week gave the dollar a lift, but dovish remarks from Federal Reserve Governor Christopher Waller – who signalled support for a July rate cut – tempered further gains. While Sterling held firm following UK jobs data, bullish momentum has so far struggled to take hold.
Looking forward
All eyes will be on key interest rate decisions this week.
- Tuesday: Remarks from US Federal Reserve Chair in focus
- Wednesday: US existing home sales released
- Thursday: European Central Bank announces rate decision
- Friday: UK monthly retail sales data published
Here’s what we’re talking to our clients about
We’re always here to support. Here are some of the conversations we’re having:
- Capital adequacy.
- Central Bank sentiment.
- Trump vs the world.
The contents of this article do not constitute financial advice and are provided for general information purposes only.