Monthly Currency Report Summary – July 2026
Overview
July 2026 was a month of recovery attempts, central bank caution and continued geopolitical pressure. After the sharp moves seen through June, markets entered July with Sterling, the Euro and the Dollar all reacting to a mixture of interest rate expectations, Middle East headlines and shifting risk appetite. The US Dollar remained a central driver across the board, but its strength was less consistent than in June. Softer US labour market data early in the month reduced confidence in further Fed rate hikes, while later safe-haven demand linked to Iran helped limit Dollar losses.
GBP/USD began July under pressure, trading below 1.3250 as markets waited for speeches from both the Bank of England and the Federal Reserve. However, Cable gradually recovered during the first half of the month, helped by weaker US data and a more constructive technical set-up. The pair pushed back above 1.3350 and later challenged 1.3400, although progress was frequently capped by the 200-day moving average and upper RSI limits. Later in the month, the pair slipped back toward 1.3300 before recovering after the Fed delivered a less hawkish message than expected and the BoE helped ease concerns over near-term UK rate cuts.
EUR/USD had a more difficult month. The pair spent much of July struggling around 1.1400, with repeated attempts to recover above this level meeting resistance. The Euro was supported at times by hawkish ECB expectations and positive European data, but it remained vulnerable to Dollar safe-haven demand whenever tensions in Iran escalated. The ECB held rates at 2.4%, which disappointed some traders and weighed on the Euro, although stronger German data and a softer Fed tone helped the pair recover late in the month.
GBP/EUR was one of the stronger-performing pairs through July, particularly in the first half of the month. The cross built on June’s momentum and climbed above 1.1750 for the first time since June 2025. However, the move became stretched. RSI indicators showed that the pair was overbought, and by the second half of the month, profit-taking and a recovery in EUR/USD pulled GBP/EUR lower. The pair fell below 1.1700 before recovering to around 1.1680 at month-end after Sterling gained support from BoE commentary.
Overall, July was not a clean directional month. GBP/USD improved from June’s lows but did not break decisively higher. EUR/USD remained trapped around 1.1400 to 1.1500. GBP/EUR reached a notable high but then corrected. The month ended with traders still focused on central bank narratives, US employment data and the next stage of the Iran conflict.
GBP/USD Performance
GBP/USD started July on the back foot, falling below 1.3250 during the early European session on 1 July. Traders were cautious ahead of speeches from Andrew Bailey and Kevin Warsh at the ECB Forum in Sintra, while US manufacturing data and employment figures were also in focus. The technical set-up favoured further bearish pressure, with the pair struggling to recover from the late-June decline.
The tone improved shortly after. On 3 July, Cable recovered above 1.3350 and began to build momentum after weaker-than-expected US non-farm payroll data cooled speculation around further Fed rate hikes. This helped Sterling retake the monthly moving average and encouraged traders to look for a move toward the 200-day moving average. However, upside above 1.3400 remained limited, partly because RSI indicators suggested the rally was becoming stretched.
Through the middle of the month, GBP/USD continued to trade around the 1.3350 to 1.3450 region. On 13 July, the pair opened below 1.3400 despite reaching highs above 1.3450 the previous week. Traders were reluctant to place significant bets ahead of US CPI data and further BoE commentary. The 200-day moving average continued to act as resistance, while revived geopolitical tensions in Iran added support to the Dollar.
US inflation data created further volatility. On 14 July, Cable fell toward 1.3344 as safe-haven demand returned during the US session, before retaking 1.3350 the following morning. The pair remained vulnerable ahead of US CPI and a speech from Andrew Bailey. On 15 July, better-than-expected US CPI data helped support Cable, but the move was not decisive. Bailey’s comments on growth and regulation failed to impress, and with the pair nearing upper RSI boundaries, progress remained capped.
The second half of the month saw GBP/USD lose momentum. On 20 July, Cable held around 1.3475 and remained above the 200-day moving average, but upside was again capped below 1.3500. Improved UK employment data on 21 July did not provide a strong lift, as traders shifted attention to inflation. On 22 July, UK CPI came in better than expected at 2.6%, but Sterling holders were largely unmoved because the data reduced expectations of future BoE hikes.
By 24 July, Cable was on a six-day losing streak and had fallen almost 0.5% in the previous session, with traders defending 1.3300. Stronger-than-expected UK retail data offered some support, but heightened military tensions in the Middle East capped the recovery. By 27 and 28 July, GBP/USD remained defensive near 1.3300, with traders waiting for the Fed and BoE decisions.
The month ended on a stronger note. On 30 July, Cable rose 0.64% after the Fed held rates and delivered a less hawkish narrative than expected. This gave Sterling some breathing room. On 31 July, BoE commentary eased fears of a UK rate cut, allowing GBP/USD to push toward 1.3477 during the previous session. However, Bailey’s comments also suggested that rate hikes remained unlikely, which capped upside and left the pair vulnerable to consolidation. By month-end, GBP/USD was above the 200-day moving average but had not secured a clear move beyond 1.3500.
EUR/USD Performance
EUR/USD spent most of July under pressure, with 1.1400 acting as the key battleground. At the start of the month, the pair opened below 1.1400 after snapping four days of positive traction. Traders were cautious ahead of the ECB Forum and further US data, with limited Eurozone releases leaving the pair exposed to Dollar movements.
The first recovery attempt came on 3 July, when a broad Greenback sell-off allowed EUR/USD to push toward 1.1470 and the 20-day moving average. However, limited European fundamentals meant traders lacked conviction. The pair remained heavily dependent on US data and Middle East headlines.
By mid-July, EUR/USD was still struggling to establish a sustained move above 1.1400. On 13 July, the pair traded from the front foot after losing ground in the Asian session, but safe-haven demand for the Dollar kept pressure on the Euro. Hawkish ECB expectations helped cap downside, as traders considered the possibility of a narrowing interest rate gap between the ECB and the Fed.
On 14 July, EUR/USD posted moderate gains but failed to capitalise above the 20-day moving average and remained below 1.1400. Further US military action in Iran limited upside, while RSI readings suggested downside was also becoming restricted. On 15 July, the pair reached 1.1462 after US data, but traders retreated ahead of 1.1470 as Dollar safe-haven demand remained present.
The second half of the month brought a mix of resilience and disappointment. On 20 July, EUR/USD traded from the front foot and attempted to retake 1.1450 while holding above the 20-day moving average. However, Middle East tensions kept traders from making stronger directional bets. On 21 July, the pair remained above 1.1400 but failed to recover above 1.1450, suggesting that momentum was still fragile.
The ECB’s monetary policy decision became a key focus. On 23 July, EUR/USD moved above the 20-day moving average ahead of the ECB announcement, helped by the possibility of weaker US unemployment data. However, upside remained capped by Dollar haven demand. On 24 July, the pair fell after the ECB held at 2.4%, disappointing traders who had hoped for a more supportive policy signal. The Euro then struggled to retake 1.1400, although positive PMI data from France and Germany helped prevent a deeper decline.
In the final week, EUR/USD remained close to 1.1400. On 27 July, the pair fell below the level for the second time since the previous Thursday, despite a softer Dollar. On 29 July, it recovered some losses as the market prepared for the Fed decision. The major improvement came after the Fed struck a less hawkish tone, helping EUR/USD rise 0.76% in after-hours trading on 30 July. Better-than-expected German data also supported the pair. By 31 July, EUR/USD held above 1.1500, although renewed safe-haven demand and Middle East tensions capped additional gains.
Overall, EUR/USD ended July firmer than its weakest points but still lacked a strong upward trend. The pair repeatedly struggled around 1.1400 before recovering above 1.1500 late in the month, helped mainly by Dollar weakness and improved European data.
GBP/EUR Performance
GBP/EUR began July in a strong position, holding above 1.1600 and testing resistance near 1.1620. The pair benefited from the previous month’s Euro weakness and the possibility that Sterling could react positively to BoE commentary. However, early-month gains were limited because GBP and EUR were both moving in parallel against the Dollar.
The strongest move came in the first half of the month. On 3 July, GBP/EUR recorded its best rate since June 2025, although traders became hesitant as RSI indicators suggested the move was stretched. By 13 July, the pair had pushed above 1.1750 for the first time since June 2025, supported by sustained momentum and relative Euro weakness. This marked the high point of the month for the Chunnel.
However, the move above 1.1750 was not sustained. Traders quickly moved into a take-profit stance, especially as EUR/USD attempted to recover and GBP/USD became more cautious. On 14 and 15 July, GBP/EUR fell back toward 1.1720, with the pair considered overbought and likely to correct toward 1.1700. This correction was not a sign of a complete reversal, but it did show that buyers were unwilling to chase the pair higher without fresh support.
Through the second half of the month, GBP/EUR entered a consolidation phase. On 20 July, the pair traded around 1.1770 after reaching its highest level in more than a year, but RSI readings again suggested upside was limited. On 21 July, the pair stabilised around 1.1760 while remaining above short and long-term moving averages. The technical picture still looked constructive, but momentum was slowing.
The correction became more visible later in the month. On 23 July, GBP/EUR fell below the 20-day moving average for the first time since mid-June. On 24 July, it broke below 1.1700 for the first time since the beginning of the month, as bearish momentum built and traders reacted to both Cable volatility and EUR/USD recovery attempts. The pair remained vulnerable into 27 and 28 July, holding around 1.1700 but struggling to regain momentum.
Central bank narratives drove the final move of the month. The Fed’s less hawkish tone supported EUR/USD more strongly than GBP/USD, which pushed GBP/EUR lower on 30 July. However, BoE commentary on 31 July helped Sterling recover, allowing GBP/EUR to retake 1.1680. Even so, the pair remained below the highs seen earlier in the month and looked more likely to consolidate than extend quickly.
Overall, GBP/EUR had a strong but uneven July. The pair reached its best level in more than a year, but overbought conditions and a late-month Euro recovery forced a correction. The 1.1700 to 1.1750 region remains important, while 1.1680 became the key level at month-end.
Key Market Influences in July 2026
Central bank commentary was the main driver of July’s FX market. The Fed held interest rates unchanged, but its tone was less hawkish than expected, which triggered a late-month Dollar sell-off. The BoE also helped Sterling by easing fears of a near-term UK rate cut, although Bailey’s comments made clear that rate hikes were unlikely in the months ahead.
Inflation data also played a key role. UK CPI came in better than expected at 2.6%, reducing expectations of BoE hikes and limiting Sterling upside. US CPI and employment figures shaped expectations around the Fed’s next steps, while Eurozone inflation data at month-end became important for assessing the ECB’s August tone.
Geopolitical risk remained a constant influence. Escalating tensions in Iran and renewed military activity supported Dollar safe-haven demand at several points, limiting rallies in both GBP/USD and EUR/USD. At the same time, revived diplomatic negotiations in the Middle East occasionally softened the Dollar and allowed recovery attempts.
Technical levels were also important. GBP/USD repeatedly reacted around 1.3300, 1.3400 and 1.3500. EUR/USD struggled around 1.1400 before recovering above 1.1500. GBP/EUR moved from above 1.1750 down toward 1.1680 as stretched RSI readings encouraged profit-taking.
Outlook for August 2026
August begins with markets likely to be quieter because of the summer period and a lighter data calendar. However, volatility could still emerge from US employment data, Eurozone inflation updates and further developments in the Middle East.
For GBP/USD, the key question is whether the pair can hold above the 200-day moving average and build toward 1.3500. A sustained break above that level would require softer US data or a firmer BoE tone. If Dollar haven demand returns, support near 1.3300 may come back into focus.
For EUR/USD, holding above 1.1500 is important. If the pair can maintain this level, it may attempt to rebuild toward 1.1600. If renewed Dollar demand returns, the pair could slip back toward 1.1400.
For GBP/EUR, the market will watch whether the pair can stabilise after July’s correction. The 1.1680 to 1.1700 area is now important. A move back above 1.1750 would require Sterling to outperform more convincingly, while renewed EUR/USD strength could keep the cross under pressure.
Overall, July showed that markets are still being driven by central bank tone and geopolitical risk rather than one-way macro trends. August may bring thinner liquidity, but the same themes are likely to remain in control.