GBP/USD + GBP/EUR Market Update

GBP/USD Extends to 1.3425 as FOMC Minutes Digest Meets Fresh Brent Surge; EUR/USD Holds 1.1438 Ahead of US CPI Countdown, Thursday, 09 July 2026

GBP/USD: 1.3425 | GBP/EUR: 1.1737 | EUR/USD: 1.1438

Brent crude surged 5% to around $77-78/bbl on Wednesday as President Trump declared the Iran ceasefire "over" and threatened additional strikes, reigniting supply-disruption fears. That geopolitical shock, combined with markets digesting the FOMC minutes published yesterday evening, has set the tone for Thursday's open: the dollar has failed to rally decisively despite the hawkish Fed backdrop, allowing GBP/USD to extend gains, while EUR/USD holds its footing above 1.1430. The session's main domestic focus is the US weekly jobless claims print at 13.30pm London time, with the more consequential US June CPI release not arriving until next Tuesday.

Overnight & Market Tone:

GBP/USD has extended Wednesday's recovery to 1.3425, building on the 1.3385 close recorded on 8 July (per Trading Economics), as the FOMC minutes failed to deliver a fresh hawkish shock beyond what the June dot-plot had already signalled. EUR/USD held steady above 1.1400 in Wednesday's European morning after losing around 0.3% on Tuesday, while GBP/USD had snapped a nine-day winning streak but managed to hold above 1.3350 before recovering. GBP/EUR has pushed to 1.1737, a fresh high for this week's move, reflecting sterling's relative resilience against both the dollar and the euro. UK 10-year gilt yields crossed 4.9% on Wednesday, touching their highest level since 10 June, as traders ramped up BoE hike bets following the crude oil surge after fresh US strikes on Iran. European equity futures are cautious given the geopolitical backdrop, and FTSE 100 pre-market tone is mixed, with energy names supported but consumer-facing stocks under pressure from the inflation implications of higher crude.

UK Data & Bank of England:

There are no tier-one UK data releases today. The most recent ONS prints remain the anchor for BoE thinking: UK CPI rose 2.8% in the 12 months to May 2026, unchanged from April. The BoE held Bank Rate at 3.75% on 18 June in a 7-2 vote, with Megan Greene and Huw Pill voting for a hike to 4.00%; services inflation at 3.7% in May kept the MPC cautious. The Bank projected CPI to be "a little under 3% in Q3 2026" and "a little over 3.25% in Q4," based on energy market pricing as of mid-June. That projection now looks conservative given Brent's renewed spike. Markets are pricing a 76% chance of a BoE rate hike by year-end, with over 50% odds for November. Bank of America economists argue multiple rate hikes remain on the table, likely in July and September, though they expect a pause at the 30 July MPC meeting. Pantheon Macroeconomics has removed its forecast for a July hike following the drop in oil prices after the initial US-Iran ceasefire, with Deutsche Bank also calling for no change in Bank Rate this year. The divergence in analyst views means the 30 July MPC decision, which accompanies a full Monetary Policy Report, carries unusually high event risk for sterling. The tone of the MPC statement and the vote split are likely to matter more than the rate decision itself: a hawkish hold with multiple dissents could push GBP higher, while a dovish signal could see sterling drift lower. Governor Bailey has recently reaffirmed that inflation is still projected to hit 2%, albeit later than previously expected, and dismissed the possibility of imminent rate cuts.

European Backdrop & EUR/USD:

The ECB raised its three key interest rates by 25 basis points on 11 June, lifting the deposit facility rate to 2.25%, effective 17 June 2026. The Governing Council cited Middle East-driven inflation pressures, with the ECB's baseline projecting headline inflation averaging 3.0% in 2026, 2.3% in 2027, and 2.0% in 2028. The critical question for EUR/USD is whether the ECB follows up with a second consecutive hike on 23 July. The June eurozone HICP flash print of 2.8% (well below the 3.0% consensus, per Eurostat, as noted in yesterday's commentary) materially reduced the probability of an immediate follow-up move, and the eurozone data calendar is light today with only a handful of ECB speakers scheduled; risks remain tilted modestly to the downside for EUR/USD in the near term, with a move below 1.1400 still possible. On the political front, Marine Le Pen has announced she will run in the 2027 French presidential election following a court decision; analysts note this does not change much for the euro near term, as markets are likely already pricing in an RN win in April 2027. There are risks that OAT spreads could experience pockets of stress around fiscal concerns during the campaign, but the baseline assumption is that RN will be careful not to unnerve the bond market before the vote. EUR/USD at 1.1438 sits in the upper half of its recent 1.1400-1.1475 range. The pair has been undergoing a correction after rising for three consecutive sessions, with buyers encountering resistance near 1.1475; the ECB holds rates at 2.25% while the Fed stays at 3.50%-3.75%, and that divergence remains the central driver. The net Fed-ECB rate differential of 125-150 basis points continues to weigh on EUR/USD structurally, but the post-NFP dollar softness has provided a near-term floor. For treasurers with direct EUR/USD exposures, the pair's behaviour this week has been one of consolidation rather than trend: with both the Fed and ECB now leaning cautious rather than clearly diverging, EUR/USD lacks a strong directional driver, effectively stuck between a firm-but-fading dollar and a euro whose rate-hike story has stalled. The next decisive input for EUR/USD is US June CPI on 14 July, which will either reinforce or undermine the current "no July Fed hike" consensus. CME FedWatch currently shows around a 76% chance that rates remain unchanged at the July FOMC meeting, though by December 2026 traders assign roughly a 40% probability of a hike to 3.75%-4.00%.

US Backdrop:

The Fed released the minutes of the 16-17 June FOMC meeting yesterday at 18.00 GMT; the minutes were expected to shed more light on the hawkish hold delivered at Chair Warsh's first meeting, though doubts remained about how much detail would be revealed given Warsh's refusal to provide traditional forward guidance. The June meeting leaned hawkish: nine of 18 participating policymakers now project at least one rate hike by end-2026, eight expect no change, and only one anticipates a cut. Standard Chartered strategist Steve Englander noted in a client note that Warsh is expected to make the FOMC minutes "less informative" regarding participant views, with the "almost all/most/many/some" phrasing likely to be reduced. The dollar's failure to rally sharply post-minutes suggests markets had already priced the hawkish tilt; the next key US data point is weekly jobless claims today and, more importantly, June CPI on 14 July. May US headline CPI ran at 4.2% year-on-year, with core CPI at 2.9%; a June print showing continued elevation would add to the case for Fed action at the July meeting.

Technical Picture:

GBP/USD: Resistance at 1.3430 (intraday high today), then 1.3480 (mid-June peak area) and 1.3500 (round-number). Support at 1.3380 (Wednesday's European session low), 1.3350 (this week's base), and 1.3290 (last week's consolidation zone).
GBP/EUR: Resistance at 1.1740 (current session high), 1.1760, and 1.1800 (psychological). Support at 1.1700 (Wednesday's close), 1.1680 (mid-week base), and 1.1640 (last week's low).
EUR/USD: Resistance at 1.1475 (this week's intraday high, per RoboForex analysis), 1.1500 (round-number), and 1.1520. Support at 1.1400 (near-term floor), 1.1380, and 1.1350 (stronger structural support).
Outlook: GBP/USD is pressing against near-term resistance at 1.3430 and a clean break would open 1.3480; the pair's upside is contingent on the dollar remaining soft post-minutes, while a hawkish CPI surprise next week represents the primary downside risk across all three pairs.

Today's Calendar:

Today's session is likely to be technically driven with US jobless claims the only live catalyst; the real test for all three pairs arrives next Tuesday with US June CPI, which will either cement or undermine the current "no July Fed hike" consensus and set the tone heading into the late-July central bank cluster.

Outlook:

The near-term bias for GBP/USD remains modestly constructive while the dollar digests the FOMC minutes without a fresh hawkish catalyst, but the pair's upside is capped by the 1.3480-1.3500 area and the risk of a sharp reversal on a hot US CPI print on 14 July is the dominant scenario to hedge against; treasurers with USD payables who have not yet acted should note that current levels remain materially above the late-June trough near 1.3161, and the three-decision late-July window (ECB 23 July, FOMC 29 July, BoE 30 July) represents concentrated event risk that could move all three pairs sharply in either direction within a single week.

This commentary is provided for informational purposes only and should not be construed as investment, legal, or tax advice. Past performance is not indicative of future results. Please consult with qualified professionals before making any financial decisions. Vantry Capital Ltd is authorised and regulated by the Financial Conduct Authority.