July 15, 2025

“Today is all about US inflation, where some of the first evidence on the impact of tariffs on prices might start to come through. The dollar continues to recover, and the pound stands out as an underperformer this week as investors fret about the UK jobs market.”

Tim Hallinan – Trading Director

USD

The dollar index reached a three-week high yesterday as it continues its slow and steady recovery in July. Last week’s tariff threats still are not rattling markets, and Trump added to them yesterday by giving Russia 50 days to strike a Ukraine deal to avoid ‘very severe’ tariffs. Meanwhile, good news about Chinese growth and cooling US-China tensions overnight have buoyed risk appetite a touch. The main event of today – and this week – is the US CPI release for June. The consensus is that we start to see some price effects of Trump’s tariffs begin to appear, and that underpins the estimate for 0.3% month-on-month and an uptick to 2.6% on the yearly figure. But the bulk is expected to arrive in July and August because of the delays in implementation and the transmission through the supply chain to the consumer. Any indication that the impact on inflation might be greater than expected would lead to a hawkish repricing of the Fed curve and a stronger dollar. If softer than feared, the greenback would likely weaken.

GBP

GBP/EUR is now down nearly 4% over the last six weeks, and it is threatening to push below the 1.15 barrier this morning. Sterling has weakened against the dollar, too, in recent days, as markets have priced in the material risk of a severe weakening in the labour market. Gov Bailey’s comments in the Times over the weekend that a softer jobs market could speed up rate cuts was soon followed by a weak KPMG/REC jobs survey yesterday, and now the focus is on whether Thursday’s labour market report might confirm an accelerating rate of job losses. Before then, though, we get speeches from Gov Bailey and Chancellor Reeves at their annual Mansion House speeches tonight, followed by CPI tomorrow morning, which is expected flat at 3.4%.

EUR

The euro has held steady against most of the G10 so far this week, in part thanks to the EU’s preference to de-escalate with the US rather than pursue retaliatory tariffs immediately. That said, a Reuters sources story this morning has suggested that the 30% tariff threats have raised the probability for further cuts, although not at this month’s meeting. The main event across the market is going to be the US CPI report today, but the ZEW survey this morning is expected to improve both on the current situation and the expectations measures.

Markets

China’s Q2 growth beat and the nod for Nvidia to resume H20 chip sales have buoyed futures this morning, after the major indexes made modest gains yesterday. Q2 earnings kick off today with the US banks, including JP Morgan and Citi. In the UK, the FTSE 100 has hit 9,000 for the first time ever – something that stands in stark contrast to sterling’s performance this week.

Main Economic Events (All Times CET)

4:00am: China Q2 GDP
11:00am: Eurozone ZEW Investor Sentiment
2:30pm: US CPI
2:30pm: Canada CPI

To learn more about Ballinger Group, please visit our website or our LinkedIn page.