Sterling steadied itself after a rocky opening yesterday as some positive industry data provided a foothold against the euro and US dollar. The tone had very much been one of caution until US President Donald Trump announced that a hastily negotiated ceasefire between Israel and Iran was already in effect. Time will tell whether that deal will hold.
GBP/EUR traded in a narrow range (just a few tenths of a cent) on Monday, but the general trend moved in an upward direction. GBP/USD and EUR/USD each advanced by the best part of a cent as the chance of the Federal Reserve cutting interest rates in July seemed to increase.
The all-important UK services sector expanded in June, based on preliminary data from the influential S&P Global purchasing managers’ index (PMI) study. Output also increased to a five-month high in manufacturing, although the sub-50 score still indicates the sector is contracting.
On a happier note, the same report did highlight a modest easing in inflationary pressures for businesses. Average prices charged by services businesses rose at their slowest pace in four years this month, leading some commentators to suggest the Bank of England is more likely to opt for a quarter-point rate cut at its next meeting in August.
Over in Germany, the Hamburg Commercial Bank (HCOB) reported a slight uptick in manufacturing PMI this month. Like in the UK, the sector is still shrinking, but the data did provide the small crumb of comfort that this was the smallest contraction since the summer of 2022.
Sales of pre-existing American homes exceeded forecasts in May. Just over four million of these homes were sold across the month – well below the highs of over six million monthly sales in the wake of the pandemic.
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