As we sail through another week in the world of international payments, it’s time for your quick, yet insightful, FX updates!

From the US dollar’s slight comeback to the euro feeling a bit under the weather, and Molly Mae Hague breaking up with Tommy Fury 😮, plenty is happening across global currency markets. But don’t worry, we’ve broken it all down for you to help you navigate these shifting tides with ease.

Key Updates:

• US Dollar Slumps The USD has been on a downtrend, experiencing its biggest two-week slide of 2024.
• Euro Pressure: The Euro faced downward pressure as Germany’s economic outlook weakened, sparking concerns over potential ECB policy adjustments.
• Pound Gains: GBP moved higher after the release of UK GDP data, which surprised the upside.
• Yen Stabilisation: The JPY remained steady following the Bank of Japan's dovish comments, reducing expectations for near-term rate hikes.

GBP

The Pound has seen a mixed performance this week. While the UK economy shows signs of resilience, with growth trending in a positive direction, the unexpected rise in unemployment claims in July has raised concerns. The Bank of England's cautious approach to rate cuts has kept GBP relatively stable, but it remains vulnerable to further economic surprises.

The British pound gained positivity after releasing stronger-than-expected GDP data for June, which showed that the UK economy grew by 0.6%, surpassing expectations. This suggests resilience in the UK economy, possibly reducing the immediate need for aggressive rate cuts by the Bank of England

The Bank of England’s cautious tone, despite the recent rate cut, suggests that further cuts will be gradual, which could keep the Pound relatively stable in the short term.

USD

The US Dollar has been on a downtrend, experiencing its biggest two-week slide of 2024. This decline was primarily driven by softer-than-expected US inflation data, which increased market expectations of multiple rate cuts by the Federal Reserve this year. The DXY (Dollar Index) dropped as traders priced in the possibility of up to 60 basis points in rate cuts by the end of the year, weakening the dollar's appeal.

The US Consumer Price Index (CPI) data released last week showed that inflation slowed more than expected, which has led to increased speculation that the Federal Reserve might cut interest rates soon. This softer inflation has put downward pressure on the USD.

💡BLK.FX Top Tip: Lower interest rates typically reduce the appeal of a currency to foreign investors​

Alongside the weakening dollar, major US equity indices, particularly the Nasdaq, saw significant declines, recording their weakest day since mid-April. This decline in equities has added to the downward pressure on the USD, as investors reassess their positions in US assets​.

EUR

The Euro has been under significant downward pressure, particularly against the dollar, largely due to the less positive economic outlook in Germany. Recent data has indicated a noticeable decline in economic activity, potentially prompting the European Central Bank to reassess its policy stance, especially with inflation showing signs of cooling across the Eurozone.

The Euro benefited from the weakening US Dollar, rising to a five-week high against the Greenback. Additionally, stable European economic data supported the Euro, despite some concerns about inflation and potential future rate cuts by the European Central Bank (ECB).

The euro has managed to hold above the 1.1000 level underpinned by expectations that the Federal Reserve might soon implement rate cuts, given the softer-than-expected inflation data from the US. This scenario has supported the euro, keeping it well-positioned against the dollar.

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If you need any advice or have questions about how these trends might affect your specific situation, don’t hesitate to reach out!

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