US PPI, US Dollar, GBP, EUR, Exchange Rates, and Market Outlook.

Key Highlight

US Producer Price Index takes centre stage at 13:30 BST

Today's US PPI release is expected to set the tone for currency markets. A weaker than expected reading could extend the recent decline in the US dollar by reinforcing expectations of lower interest rates. A stronger result would likely support the dollar and reverse some of the losses seen over the past two sessions.

Sterling retains a medium term advantage against the euro

The strongest medium term theme remains GBP against EUR. The UK's interest rate outlook continues to provide support for sterling relative to the eurozone. Attention now turns to the European Central Bank meeting on 23 July, which could shape the next move for the pair.

Markets remain divided on the US dollar outlook

Although recent inflation data has weakened the dollar, professional investors continue to favour a stronger US currency over the medium term. This creates uncertainty ahead of today's inflation data and increases the potential for volatility across major currency pairs.

Market Recap

The US dollar came under pressure after US inflation recorded its first decline since 2020. As expectations for a July Federal Reserve rate increase fell sharply, businesses buying US dollars benefited from more favourable exchange rates and lower hedging costs.

Overnight, geopolitical tensions increased after the United States reimposed a naval blockade on Iranian ports following attacks on commercial shipping in the Strait of Hormuz and strikes targeting Bahrain and Kuwait. Any further escalation could increase inflation concerns, boost demand for safe haven assets and provide renewed support for the US dollar.

Elsewhere, commodity linked currencies strengthened. The New Zealand dollar, Norwegian krone and Australian dollar all gained against sterling, making purchases in these currencies more expensive for UK businesses while benefiting those converting them back into pounds.

Market Overview

EURUSD

The broader outlook continues to favour the US dollar despite yesterday's softer inflation figures. Stronger US economic fundamentals and higher Treasury yields continue to support the dollar over the euro, although today's PPI release has the potential to challenge that view if inflation comes in below expectations.

For businesses with US dollar exposure, today's data could create meaningful movement in exchange rates. A stronger dollar would increase the cost of buying dollars, while a softer inflation reading could provide an opportunity for more favourable pricing.

GBPUSD

Sterling has strengthened over recent sessions, but the overall picture remains finely balanced. Investor positioning and ongoing geopolitical risks continue to provide support for the US dollar, although a weaker than expected PPI result could quickly shift momentum back in favour of the pound.

Businesses making US dollar payments should be prepared for increased volatility following today's inflation release, with exchange rates likely to react sharply in either direction.

GBPEUR

Sterling continues to hold a constructive medium-term outlook against the euro, supported by the UK's relatively stronger interest rate position. While there is little immediate catalyst for significant movement today, the European Central Bank meeting on 23 July will be an important event that could influence the next direction for the pair.

For businesses trading between the UK and Europe, the medium-term outlook still favours sterling, although central bank guidance later this month will be key.

Bottom Line

Markets are firmly focused on the US Producer Price Index at 13:30 BST, which is expected to determine whether the recent weakness in the US dollar continues or reverses. While investor positioning still points towards a stronger dollar over time, today's inflation data will be critical in shaping near term market direction.

Our strongest medium-term view remains GBP against EUR, supported by the UK's relative interest rate advantage. Looking ahead, the European Central Bank meeting on 23 July is the next major event likely to influence sterling and euro exchange rates.

15th July 2026

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