FX Market Overview

As of 05:45 ET (09:45 GMT) on 31 July 2026, the British pound slipped to 1.3448 USD per GBP, marking a 0.13 % decline for the day, while the euro fell to 1.1505 USD per EUR, down 0.20 % after briefly breaking the 1.150 level for the first time in weeks on Thursday.

US Dollar Dynamics and Data Impact

The dollar’s recent weakness accelerated after market participants concluded that the Federal Reserve was reluctant to translate its price‑stability rhetoric into concrete policy tightening. Fed Chair Kevin Warsh offered ambiguous guidance on the central bank’s reaction function, which compounded the sell‑off. ING FX strategist Francesco Pesole warned, “There may still be room for further USD long‑squeezing, and we remain reluctant to call the bottom in this dollar sell‑off just yet.”

Two key US data releases sharpened the dollar’s losses: Core PCE rose only 0.1 % month‑on‑month in June, and Q2 2026 GDP grew 1.5 % annualised, both falling short of expectations. The DXY index briefly dipped below 100 on Thursday, its lowest level since Warsh’s June press conference that had previously lifted the greenback.

No Fed speakers were scheduled for Friday, but a packed US calendar next week could provide fresh directional catalysts. ING noted that if dissenting FOMC votes become routine, off‑meeting remarks from individual members will attract heightened scrutiny ahead of the September decision.

UK Pound Outlook

ING stressed that the pound’s modest retreat does not reflect any shift in UK fundamentals; the move is entirely dollar‑driven. With no significant domestic data or policy developments in focus, the pound remains broadly supported by the broader shift in dollar momentum, and the intraday pullback in GBP/USD appears to be consolidation rather than a reversal of the recent uptrend.

Eurozone Inflation and ECB Stance

Eurozone consumer‑price growth accelerated slightly in July, coming in fractionally above consensus and reinforcing expectations of further ECB tightening. Headline CPI rose to 2.9 % YoY, up from 2.8 % in June, while core inflation reached 2.5 % and services inflation climbed to 3.3 %, according to Eurostat.

The ECB, which kept rates unchanged earlier in July and warned that “uncertainty remains high” around the Iran war and the lingering effects of the energy shock, will factor today’s inflation print alongside an August release before its September meeting.

Analyst Commentary on EUR/GBP

ING sees the EUR/GBP pair’s near‑term ceiling around 1.160. Pesole added, “We would not view a move above 1.160 as very sustainable unless markets repriced USD rates materially lower again and Middle East tensions eased.” He also noted that “EUR/USD may continue to find buyers around the 1.150 level for a while longer.”