Monthly Currency Report Summary – July 2025

Overview: The month of July 2025 delivered high volatility across the FX markets, driven by a combination of Federal Reserve decisions, political interventions from President Trump, trade deal negotiations, and mixed economic data. While early July began with multi-year highs for both GBP/USD and EUR/USD, the narrative quickly shifted as USD regained strength on the back of the Fed’s defiance of Trump’s calls for rate cuts. This, combined with strong US GDP and employment data, saw both GBP/USD and EUR/USD retreat sharply by month’s end.

The GBP/EUR cross was shaped by relative weakness across both majors, with Sterling fluctuating between resilience and vulnerability, depending on how each currency fared against the Greenback. Broader themes included trade truce extensions, EU tariff adjustments, the Labour government’s fiscal credibility, and ongoing Middle Eastern tensions—all of which injected uncertainty into markets.

GBP/USD – From Multi-Year Highs to Sharp Retreat

Early July: Multi-Year Highs and Bullish Momentum

The month began with optimism for Sterling. On July 1st, GBP/USD pushed toward 1.3760, nearly surpassing late-June multi-year highs. This was underpinned by broad USD weakness amid speculation around Fed credibility and Trump’s repeated challenges to Powell’s leadership. RSI indicators, however, signalled overbought conditions, suggesting limited room for upside.

By July 2nd, Cable consolidated around 1.3700, with traders booking profits after a strong June rally. Powell’s commentary placed blame for tighter policy on Trump, while Andrew Bailey confirmed the BoE’s cautious approach to rate cuts, adding to divergence between the Fed and the BoE.

Mid-July: Political Pressures and Volatility

The second week of July introduced political headwinds. On July 3rd and 4th, UK bond market turmoil and Reeves’ fiscal U-turns undermined Sterling confidence, sending GBP/USD down to 1.3450–1.3500 levels. Despite temporary rebounds tied to Trump delaying tariff deadlines, the pair failed to regain its bullish tone.

Between July 7th and July 10th, Keir Starmer’s declining approval ratings, rising UK unemployment, and investor concerns around GDP growth weakened Sterling further. Cable consolidated near 1.3600, repeatedly testing support. Markets leaned on Fed minutes suggesting September cuts, but geopolitical noise kept upside capped.

By July 14th, Cable had fallen for 9 out of 10 sessions, entering a bearish consolidation around 1.3500. Technical indicators pointed to oversold conditions, slowing further downside momentum.

Late July: USD Strength Reasserts Itself

The final fortnight brought decisive USD strength. On July 16th–17th, US inflation data (CPI and PPI) printed above expectations, boosting Greenback demand. Even though UK CPI also surprised to the upside at 3.6%, Sterling failed to capitalise. By July 21st, GBP/USD hovered around 1.3450, weighed down by bearish technicals and doubts over UK growth prospects.

The steepest declines came in the final week. On July 29th, Cable traded below 1.3350, building bearish momentum on renewed US-China trade deal revisions. By July 30th, it hit a fresh two-month low at 1.3300, with the Fed refusing to cut rates despite Trump’s pressure. Finally, on July 31st, Cable closed the month below 1.3300, having fallen 2.4% in the final week alone.

EUR/USD – Strong Start, Weak Finish

Early July: Multi-Year Highs Above 1.1800

EUR/USD mirrored Cable’s early July strength, surging to 1.1800–1.1830 levels in the first week, its highest since September 2021. Optimism was driven by sustained USD weakness, dovish Fed expectations, and upbeat Eurozone inflation progress. However, RSI indicators signalled the pair was overbought, limiting further gains.

Mid-July: Mixed Data and Tariff Tensions

Through July 9th–15th, the Fiber began to fade. Traders tested support around 1.1700, with sentiment dampened by Trump’s tariff threats against the EU. Even as the ECB maintained its policy at 2.15%, confidence faltered amid speculation of fresh tariffs and weaker German PMI releases.

By mid-month (July 16th–17th), US inflation beats added pressure, driving EUR/USD down toward 1.1600. Momentum was largely bearish, with the pair logging only two green days in the first half of the month.

Late July: Bearish Drag Intensifies

The Fiber endured sustained losses in the second half of July. EU trade deals involving 15% tariffs and commitments to higher military spending eroded confidence in the bloc’s fiscal outlook. On July 25th, despite resilient service sector data, EUR/USD could not hold ground above 1.1800.

By July 29th, the pair had fallen 1.37% in a single session, dropping to 1.1550 and breaking below its monthly trend line. On July 30th, it closed at 1.1549, and by July 31st, it breached 1.1500 after six consecutive days of losses.

The monthly decline underscored USD dominance supported by GDP growth of 3%, strong non-farm data, and the Fed’s refusal to cut rates.

GBP/EUR – Sterling Resilience Despite Cross-Market Weakness

Range-Bound but Volatile

The GBP/EUR cross spent much of July fluctuating between 1.1500 and 1.1650, reflecting alternating weakness between Sterling and the Euro.

• Early July: The pair hovered near 1.1680, supported by relative GBP resilience against a weak EUR/USD.

• Mid-July: Sterling’s political struggles (Labour’s fiscal credibility, Starmer’s approval decline) weighed on the cross, pulling it below 1.1550 on multiple occasions.

• Late July: The pair rebounded sharply on July 29th, climbing almost 1% as the EUR suffered from trade deal concerns and ECB policy stagnation. Resistance was found near 1.1600, though profit-taking capped upside.

By month-end, GBP/EUR settled near 1.1580–1.1600, with volatility largely tied to cross-flows against the Greenback rather than independent UK or EU fundamentals.

Key Market Drivers in July 2025

1. Federal Reserve vs Trump

   • Trump’s public pressure on Powell to cut rates was a constant theme.

   • The Fed held firm, refusing to deliver early cuts, boosting USD strength in late July.

2. Economic Data

   • US GDP (3%) and strong employment reports solidified USD resilience.

   • UK CPI (3.6%) temporarily supported Sterling, but weak labour market data offset gains.

   • Eurozone PMI and retail data underperformed, weakening the EUR.

3. Trade Tensions

   • US-China truce extensions, EU-US tariff negotiations, and Trump’s threats of 20–30% tariffs drove sentiment.

   • The EU’s acceptance of 15% tariffs plus defence spending commitments eroded Euro confidence.

4. Political and Fiscal Concerns

   • In the UK, Labour’s fiscal credibility came under fire after Reeves’ policy U-turns and borrowing levels drew IMF criticism.

   • In the EU, trade concessions undermined confidence in the ECB’s policy stance.

   • US politics dominated, with Trump threatening Fed independence and floating Powell’s replacement.

5. Geopolitical Risks

   • Middle Eastern tensions and natural disasters briefly boosted USD safe-haven demand.

   • NATO discussions also weighed on broader risk sentiment mid-month.

Outlook for August 2025

• GBP/USD:
  With the pair ending July below 1.3300, momentum favours further downside unless the Fed softens its stance or UK data surprises positively. Immediate support lies at 1.3250, with resistance around 1.3450.

• EUR/USD:
  The breach of 1.1500 signals bearish continuation. Next support levels are at 1.1450 and 1.1370, with resistance capped near 1.1650. ECB policy clarity will be critical.

• GBP/EUR:
  Likely to remain range-bound between 1.1500 and 1.1650. Sterling could outperform slightly if Euro weakness persists, but both currencies remain vulnerable against the USD.

• Risks to Watch:

  • Fed policy and US data (NFP, inflation, GDP revisions)

  • UK retail and employment data amid fiscal scrutiny

  • Eurozone growth concerns post-tariff agreements

  • Trump’s continued intervention in monetary policy

Conclusion

July 2025 highlighted the fragility of Sterling and the Euro when faced with a resurgent US Dollar. Cable’s decline from above 1.3760 to below 1.3300 marked one of its sharpest monthly reversals in recent years. The Fiber’s drop from 1.1830 to sub-1.1500 mirrored this, as strong US data and Fed independence solidified Greenback dominance.

The GBP/EUR cross, however, remained relatively stable, oscillating within a narrow band as both currencies suffered independently against the USD.

Looking ahead, August may carry forward USD momentum unless global risk sentiment turns or central banks deliver dovish surprises. Traders should prepare for continued volatility, with macroeconomic data and political narratives from Trump likely to dictate market direction.