July 30, 2025

“Today is huge for FX, with markets set to receive data on Q2 GDP growth for both the US and the eurozone, followed by interest rate decisions from the Bank of Canada and the Federal Reserve. The economist consensus is expecting some stark divergence in the growth prospects on either side of the Atlantic.”

Sam Cornford – Head of Trading

USD

The dollar is in consolidation mode ahead of Q2 growth data and the Fed today, after climbing around 1.8% so far this week. Yesterday’s data was a mixed bag, with consumer confidence a touch better than expected but job openings slightly worse, keeping concerns alive about a labour market slowdown. Today is the big one for the week, and the first estimate for Q2 GDP growth is expected to come in at 2.5%, as the US economy bounces back from a warped Q1 figure driven by import frontloading in anticipation of tariffs. The details of particular interest will be a) real consumer spending growth (i.e. the backbone of the US economy), and b) quarter-on-quarter core PCE inflation. The consensus for those is 1.5% and 2.3%. We then get the Federal Reserve policy decision for July, where markets are pricing in only a 3% chance for a rate cut – much to Donald Trump’s displeasure. Expect Powell to stand firm on his view that more data is needed before he can be sure that inflation will not reignite, though Gov Waller has already indicated that he would dissent and call for a rate cut. Powell will also get plenty of questions on his job and the Fed’s independence. To the north, the Bank of Canada also makes a rate decision today, where the market is similarly expecting no cut and will be focused on the future.

GBP

For sterling, this week has been a story of underperforming the dollar but not quite as badly as the euro. That translates to a 0.6% drop in GBPUSD and a 1.4% rally in GBPEUR. All eyes are going to be on the long list of data coming out of the US and the eurozone, so the pound will be at the mercy of its peers for today. There is a business survey for the UK overnight, but the next major event is going to be the Bank of England decision next week.

EUR

Today’s growth data is predicted to point to economic stagnation for the eurozone once again in the second quarter, reinforcing the divergent performances for the euro and the dollar this week. So far, Spain and France have performed slightly better than expected, but with the estimate for the bloc-wide figure at 0.0%, these might make growth slightly positive at best. On top, we also get some wage data today, and Spain has kicked off the July CPI inflation releases this morning with a 2.7% print, versus the 2.6% expected. In general, a reminder for markets that eurozone growth is likely to remain subdued this year is enough to keep the euro under pressure.

Markets

European stocks are on the backfoot this morning, with the UK’s FTSE 100 in particular taking a near 0.5% hit, and US markets ended yesterday’s session weaker after a couple of soft earnings reports from the likes of Boeing and Merck.

Main Economic Events (All Times CET)

9:00am: Spain CPI
11:00am: Eurozone Q2 GDP
2:15pm: US ADP Employment Change
2:30pm: US Q2 GDP
3:45pm: Bank of Canada Rate Decision
8:00pm: Federal Reserve Rate Decision

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