Bank of England 25-Basis-Point Cut Expected.

• The dollar remained weak as markets increased bets on a Fed rate cut, spurred by soft labor data and political instability.
• President Trump implemented sweeping new tariffs on over 90 countries, claiming tariffs are generating billions in revenue.
• Exporters face headwinds from the strong euro and growing global tariff risks.
• The BoE is expected to cut rates by 25bps, with a projected 7–2 MPC vote split.
• Chancellor Rachel Reeves flagged a £41bn fiscal gap, raising concerns over future tax hikes.

USD: 

The U.S. dollar remained under pressure as markets priced in higher odds of Federal Reserve interest rate cuts. Weak labor market data and political uncertainty—amid recent firings and upcoming Fed Board appointments—have dented confidence in U.S. economic policy stability.

US President Donald Trump’s sweeping new tariffs on more than 90 countries around the world have come into effect. Just before the deadline for deals to be agreed to cut or avoid the import taxes Trump posted on his Truth Social platform that billions of dollars were now flowing into the US due to tariffs. Earlier, the president hit India with a 50% tariff, which will take effect on 27 August unless it stops buying Russian oil.

Trump also threatened a 100% tariff on foreign-made computer chips as he pushes tech firms to invest in the US. It came as Apple announced a new $100bn (£75bn) US investment after coming under pressure from the White House to move more production to America.

 

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EUR:

The euro held firm—evidenced by the EUR/USD rising as the U.S. dollar came under renewed pressure from dovish Federal Reserve rate-cut expectations and political uncertainty within U.S. economic institutions.

European companies are underperforming compared to their U.S. counterparts in this earnings season, with the Stoxx Europe 600 seeing flat year-on-year earnings—contrasting sharply with the S&P 500’s 9% growth. A stronger euro and concerns over tariffs are straining exporters, especially in the auto sector.

The European Central Bank warns that mounting competition from Chinese imports has already led to significant manufacturing job losses in the eurozone—240,000 over recent years—particularly in vehicle and chemical sectors. This pressure may intensify as U.S. tariffs push Chinese exporters to seek new markets like Europe.

 

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GBP:

Markets appeared cautiously optimistic ahead of the Bank of England’s impending rate decision, with sterling maintaining composure amid broader dollar weakness. The Bank of England are expected to cut interest rates by 25-basis-points, with the vote expected to show 7 MPC members voting to cut and 2 voting to remain unchanged.

Uncertainty remains for the pound amid Chancellor Rachel Reeves comments surrounding a £41 billion black hole. Prime Minister was questioned on this, to which he would not comment on the prospect of tax hikes when the Autumn budget comes round. This uncertainty could weigh on the GBP in the coming months as data points will also be key.

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