July 14, 2025

“Tomorrow’s US CPI inflation is the main event this week, followed by inflation and jobs data in the UK.”

Sam Cornford – Head of Trading

USD

Trump maintained his grip on the news headlines over the weekend with the threat of 30% tariffs on the EU and Mexico. Price action for EUR and MXN has once again been muted, though, as investors continue to interpret the moves as simply a negotiation tactic to speed up the timeline on trade deals. The general belief appears to be that Trump will not want to risk another ‘liberation day’-style market meltdown and is just trying to draw out further concessions from its trading partners. The market has underestimated him several times so far, leaving the dollar potentially vulnerable to another sharp pullback if he goes ahead with these threats. Beyond trade, the biggest event this week is tomorrow’s CPI inflation. The consensus is not expecting the full effect of tariffs to start passing through to consumer prices quite yet, but the estimated 0.3% m/m figure should reflect at least an initial reading on their likely impact.

GBP

The pound is falling further this morning, this time triggered by a particularly soft KPMG/REC jobs survey. The ‘staff availability’ index – an indicator of labour market slack – grew at the fastest pace since 2009, ostensibly due to the growing number of employers holding back on making hiring decisions amid the current uncertainty. The payrolls figure in Thursday’s wage growth and jobs data will be particularly important for markets as they look to see whether the big 109K contraction shown in May sticks, or if it is revised down. Any solid indication of a non-linear weakening in the labour market could jolt the Bank of England into accelerating its cutting cycle. That is made complicated by the consensus for another 3.4% CPI inflation print on Wednesday, however.

EUR

The euro has weakened somewhat over the past couple of weeks, but it has been resilient over the weekend despite the 30% US tariffs that are set to arrive by 1^st August. The EU has delayed the implementation of retaliatory tariffs, likely in the hope that it can continue to de-escalate and pursue a trade deal, which the EU trade commissioner said was ‘very close’ this morning. The ECB decision next week is the next major domestic event for the euro, and in the meantime, we are looking towards tomorrow’s ZEW survey and trade data this week.

Markets

The equity markets are looking broadly weaker this morning, especially in Europe, as investors take a step back while Trump fills the headlines with tariff news.

Main Economic Events (All Times CET)

1:01am: UK KPMG-REC Jobs Report

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