Morning Report
July 21, 2025
“Thursday is the one to watch out for this week, with PMIs for the eurozone, UK, and US, alongside the July ECB rate decision. Trade and Fed independence also remain key themes for the dollar.”
Sam Cornford – Head of Trading
USD
The dollar is broadly a touch weaker versus the G10 this morning as markets look ahead to a speech from Fed Chair Powell and some data on housing and economic activity. The greenback fell through much of Friday as investors digested a speech from the Fed’s Waller on Thursday entitled ‘The Case for Cutting Now’, though the first cut still is not expected until at least September. The market is pricing in a 66% chance for a cut at that meeting right now, but there is space to move that significantly higher or lower depending on the balance between the upward price pressures from tariffs and the cooling in the labour market. Thursday’s PMIs are the highlight for this week alongside housing data, and we also get a speech from the Fed Chair tomorrow, who has been under intense criticism in recent months over his refusal to bow to Trump’s demands and cut rates.
GBP
Sterling is trading on the front foot this morning after weakening off in the final hours of last week. The major themes that have hurt the pound in recent months largely boil down to a) gloom around UK economic growth, particularly with regards to the labour market, and b) the persistent fiscal challenges. Gov Bailey will speak tomorrow on British financial stability, and the growth signals from the PMIs, retail sales, and consumer confidence later in the week will be key for sterling.
EUR
The ECB and EU-US trade negotiations are the main focus for the euro this week. While Commerce Secretary Howard Lutnick appeared to be confident in a trade deal being agreed before the 1st August deadline, reports have suggested that the EU is preparing a backup plan for retaliatory tariffs in a no-deal scenario, and von der Leyen is headed to China this week to gain some leverage via Xi Jinping. The ECB decisions is almost certainly going to be a rate hold, but markets will be analysing the general mood across the Governing Council and whether there is appetite for further cuts down the line.
Markets
Some major earnings releases arrive this week, including the likes of Alphabet, Tesla, LVMH, and Coca-Cola. US stocks appear to be relatively buoyant heading into the week, while European indexes are slightly weaker.
Main Economic Events (All Times CET)
3:00pm: US Leading Index
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