All eyes on US inflation as big dollar test

All eyes on US inflation as big dollar test

Markets largely shrugged off renewed Middle East tensions this week, so Tuesday’s US CPI is the first real test of whether the dollar’s pullback has legs. A soft print would suggest inflation is peaking and keep the dollar on the back foot. Whereas a hotter read revives the “higher for longer” case. Meanwhile sterling holds firm and its breakout against the euro is intact.

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Today’s FX rates: 13 July 2026

Currency pair Rate
gbp usd 1.3386
eur usd 1.1430
gbp eur 1.1711

Rates correct as of 11:50am on Monday 13 July but may now have changed.

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The Big 3

A deeper look at the performance of major currency pairs this week. Become a subscriber to receive the full reports.

Middle East tensions lose their grip as sterling climbs

GBP/USD edged higher last week on incremental gains, with markets now largely shrugging off Middle East escalation. Pill kept up his hawkish line, though a long BoE pause still looks likely. This week’s key events include US CPI on Tuesday, expected to show inflation near a peak, Bailey at Mansion House, and Thursday’s UK GDP for a read on whether last month’s soft print was a blip.

Euro holds steady as US inflation takes the spotlight

EUR/USD held a tight range last week amid low volatility, with the muted $6 oil move keeping Middle East inflation risks contained for now. A quiet eurozone calendar hands the focus to US CPI and Warsh’s testimony. The ECB is set to hold next week, though markets have nudged up hike bets and still lean towards a September move. With the dollar consolidating after its retracement, Tuesday’s inflation print is the catalyst to watch.

Sterling’s breakout holds as it tests 1.1740

GBP/EUR pushed its breakout further last week, testing 1.1740, with the early-week dip not denting a bullish bias that holds above 1.1610. A quiet eurozone calendar leaves technicals in charge, and the euro’s early strength looks technical rather than fundamental. Middle East escalation could firm up an ECB hike in September, but stagflation remains a headwind. For sterling, Thursday’s GDP is the read to watch after last month’s miss.

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Looking forward

Key dates for your calendar. 

  • Tuesday: 🇦🇺 Australia Westpac Consumer Confidence, Australia NAB Business Confidence, 🇨🇳 China Balance of Trade, 🇺🇸 US Inflation Rate (CPI), Fed Chair Warsh Testimony
  • Wednesday: 🇨🇳 China GDP Growth Rate (Q2), China Industrial Production, 🇺🇸 US PPI, Fed Chair Warsh Testimony, 🇨🇦 BoC Interest Rate Decision,
  • Thursday: 🇬🇧 UK GDP (May), 🇺🇸 US Retail Sales
  • Friday: 🇺🇸 US Housing Starts, US Building Permits, US Michigan Consumer Sentiment

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:

  • Impact of Burnham as PM
  • Market reaction to Middle East tension
  • US inflation data this week

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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.

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