Weekly Currency Forecast: GBP, EUR, USD (July 13–17, 2026)

Policy Mandate Divergence

The 17 June policy meetings crystallized the asymmetry. The BoE held Bank Rate at 3.75% in a 7–2 vote, with two members voting to raise by 25 basis points to 4.00% — a hawkish hold, not a dovish one. The Federal Reserve held the federal funds target range at 3.50–3.75% on the same day in a unanimous 12–0 decision — Warsh's inaugural meeting as Chair — while removing language signaling a bias toward cuts and shifting the dot plot upward: most officials now see the rate ending 2026 between 3.6% and 4.1%, against 3.25–3.75% previously. The European Central Bank went furthest on 11 June, raising all three key rates by 25 basis points and taking the deposit facility rate to 2.25% with effect from 17 June — its first increase since September 2023, reversing the eight consecutive cuts delivered between June 2024 and June 2025.

The common driver is energy. Euro area flash HICP reached 3.2% year-on-year in May, the highest since September 2023. US CPI accelerated to 4.2% in May from 3.8% in April, and core PCE rose 3.4% over the twelve months to May. The recently signed US–Iran peace deal has since taken some heat out of energy markets, softening expectations of an immediate summer inflation spike — and loosening rates markets' conviction that aggressive tightening is imminent.

Calendar Mechanics and Currency Levels

GBP/USD is forecast to trade between 1.3200 and 1.3550, with Sterling entering the week at 1.3394 against the dollar (10 July). GBP/EUR may hold a 1.1650–1.1850 range after the ECB's June move; Sterling traded at 1.1738 against the euro (11 July). EUR/USD is expected to remain capped between 1.1300 and 1.1500. No BoE, Fed, or ECB rate decisions sit on this week's calendar, and June UK CPI is not due from the ONS until 22 July, leaving Sterling to take its directional cues from speeches and Thursday's growth figures.

The US Dollar Index is approaching resistance at 101.39, a 13-month high that, on a clean break, would likely reinforce USD/JPY upside and accelerate EUR/USD downside. USD/JPY closed last week with a 0.21% gain, while the euro weakened 0.16% against the dollar. Tuesday is a public holiday in France, which may thin European liquidity and amplify dollar-driven moves.

Geopolitical Overhang and Positioning

The Strait of Hormuz remains the principal wildcard. Reported exchanges of fire have effectively closed the strait to shipping, with attacks on US partners across the region lifting crude and supporting the dollar. Rates markets have begun discounting the geopolitical premium, but the latest Commitment of Traders report — showing funds reducing exposure to crude and precious metals while increasing buying in grains and soft commodities — confirms a rotation rather than a full exit from commodity-linked pairs. With 19% of major currency pairs moving more than 1% last week, the volatility dispersion argues for waiting on Tuesday's CPI print before committing structural positions. The policy perimeter is tightening across channels: as India's central bank renews its push to cut off banking-sector exposure to crypto, the bounds of regulated finance continue to constrict across both monetary and digital-asset rails.