A surprise slump in US retail sales, the weakest since May 2025, knocked the dollar and lifted both sterling and the euro going into this week. Softer US data points to a more patient Fed, sharpening the divergence with an ECB now leaning towards a September hike. Sterling is drawing support from solid UK GDP and its yield advantage, with Wednesday’s UK inflation print the key domestic test. Lagarde’s comments and Friday’s eurozone PMIs round out a busy week.
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Today’s FX rates: 17 August 2026
| Currency pair | Rate |
|---|---|
| gbp usd | 1.3560 |
| eur usd | 1.1591 |
| gbp eur | 1.1697 |
Rates correct as of 13:15am on Monday 17 August but may now have changed.
The Big 3
A deeper look at the performance of major currency pairs this week.
Sterling climbs as weak US data weighs on the dollar
GBP/USD kept grinding higher last week, helped by solid UK GDP at 0.3% and a soft US backdrop, with sterling drawing inflows on its relatively high yield in a low-volatility market. A surprise slump in US retail sales, the weakest since May 2025, dragged the dollar lower late in the week. Focus now shifts to a busy UK calendar, with Wednesday’s inflation print the standout: a reading above 3% would firm up September hike odds, currently around 25%, and could give sterling a further lift.
Rate divergence keeps the euro supported
EUR/USD pushed higher into the end of last week after that surprise slump in US retail sales. The euro has its own supports too: sticky inflation expectations near 2.4%, an improved growth picture with Q2 up 0.4%, and rate divergence as the ECB leans towards a September hike. Lagarde speaks on Wednesday, with Friday’s German and French PMIs the week’s key data, where a reading above 50 would lend the euro further support.
GBP/EUR steadies with CPI in focus
GBP/EUR held a tight range while broadly unwinding its mid-July gains. Solid UK GDP helped sterling hold ground, though its yield advantage isn’t translating into gains against a euro that’s finding its own support from sticky inflation expectations and a firmer growth picture. Wednesday’s UK inflation print is the key release. Tuesday’s wage data is also worth watching for signs that cooling pay could stay the MPC’s hand.
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Looking forward
Key dates for your calendar.
- Monday: 🇯🇵 Japan GDP Growth Rate, 🇨🇳 China Retail Sales, 🇨🇳 China Industrial Production, 🇨🇦 Canada Inflation Rate
- Tuesday: 🇦🇺 Australia Westpac Consumer Confidence, 🇬🇧 UK Unemployment Rate, 🇪🇺 Eurozone ZEW Economic Sentiment Index, 🇺🇸 US Housing Starts, 🇺🇸 US Building Permits
- Wednesday: 🇬🇧 UK Inflation Rate (CPI), 🇺🇸 US FOMC Minutes
- Thursday: 🇯🇵 Japan Balance of Trade
- Friday: 🇯🇵 Japan Inflation Rate, 🇬🇧 UK Retail Sales, 🇪🇺 Eurozone Manufacturing PMI Flash, 🇬🇧 UK Services PMI Flash, 🇬🇧 UK Manufacturing PMI Flash
What we’re talking to our clients about
Clients can always reach out to us on the phone. Here are some of the conversations we’re having:
- GBP/USD three month high
- Gold gains and dollar weakness
- Data heavy week and Fed minutes published
The contents of this article do not constitute financial advice and are provided for general information purposes only. While the content is based on information believed to be accurate at the time of publication, no guarantee is provided.
