Morning Report
July 24, 2025
“A series of trade deals are now making their way through as we near the 1st August tariff deadline, with Japan and now possibly the EU bringing tariff rates down to 15%. Today is about the PMIs and the ECB decision, where policymakers are set to pause rate cuts for the first time since last year.”
Sam Cornford – Head of Trading
USD
More trade news broke yesterday, with the EU and the US closing in on a trade deal that follows the US-Japan blueprint with 15% tariffs on EU goods. That proved to be more positive news for equities and the euro than for the dollar yesterday, which is close to erasing its gains from the first half of July, having fallen more than 1.5% over the last week. The lack of data so far this week has seemingly given room for investors to return to positioning away from the dollar. There is plenty going on today, however, and the focus in the US is on the PMIs, jobless claims, and new home sales. The consensus is expecting a slightly softer picture on the US economy compared to June at 52.8 (i.e. mild expansion), the jobless claims figure will help to shape expectations for next week’s non-farm payrolls print, and any weakness in the housing sector is bound to draw criticism from Trump on the Fed’s high interest rates.
GBP
Sterling had a solid day yesterday and consolidated in the 1.35s as it seemed to benefit from a broader pickup in risk appetite. Today’s PMIs come at a time where poor expectations for UK economic growth have contributed significantly to a 3.4% drop in GBPEUR over the last couple of months, meaning that the pound could be at risk of falling further if the data undershoots the 51.8 consensus estimate. We also get consumer confidence and retail sales data early tomorrow morning – retail sales are expected to have jumped 1.2% in June, though this follows a 2.7% slump the month prior.
EUR
The ECB meets for its July monetary policy decision today, and although there is a very high chance that rates are held steady, the market will be looking out for a) what appetite there is for further rate cuts (one more is priced at the moment), and b) what impact the 15% rally in EURUSD might have on monetary policy. Policymakers are always at pains to assure markets that they do not target specific FX rates, but a stronger euro might push inflation down through its impact on import prices. The PMIs that have been released this morning have been mixed and predictably stagnant, with France’s composite index printing at 49.6 and Germany undershooting expectations at 50.3.
Markets
Equities surged across the board as news broke of US trade deals with Japan and possibly the EU. Japan’s Nikkei jumped another 1.6% after gaining 3% yesterday.
Main Economic Events (All Times CET)
8:00am: German GfK Consumer Confidence
10:00am: Eurozone PMIs
10:30am: UK PMIs
2:15pm: ECB Rate Decision
2:30pm: US Jobless Claims
3:45pm: US PMIs
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