This week’s macro focus shifts to inflation in the UK and the eurozone, followed by a fresh reading on the U.S. services activity. Together, the releases will give markets another view of how quickly inflation is cooling and whether major central banks have room to become less restrictive.
GBP: UK Consumer Price Index (CPI) YoY
August 19, 09:00 MT time
Forecast: TBC | Previous: 2.6%
UK inflation will be one of the key tests for the pound as markets guess whether the recent cooling in price pressures could continue. Headline CPI slowed to 2.6% YoY in June from 2.8% in May, while core CPI remained at 2.6%, suggesting that underlying inflation is proving somewhat stickier than the headline figure. Meanwhile, the Bank of England has limited time to rest: inflation is moving closer to target, but domestic price pressures still need watching.
A July reading comfortably below 2.6% would strengthen the case for a softer BoE stance and could weigh on the GBP. A rebound would do the opposite, particularly if core inflation also accelerates. For the national currency, the key question is whether disinflation is becoming established — or just pausing.
Affected instruments: GBPUSD, EURGBP, GBPJPY, and other GBP-pairs
EUR: Eurozone Consumer Price Index (CPI) YoY
August 19, 12:00 MT time
Forecast: 2.9% | Previous: 2.8%
The eurozone headline inflation fell to 2.8% YoY in June from 3.2% in May, with energy inflation easing but still running at elevated levels. Services inflation also cooled to 3.2% from 3.5%, an important development because services have been one of the more persistent sources of price pressure. The 19th August release will provide the final July reading, so the market will focus on whether the earlier estimate is confirmed and on any revisions to the underlying components.
The inflation remaining clearly above the ECB’s 2% objective would pressure the officials to maintain a restrictive stance. A meaningful downside revision would reduce the pressure and could weigh on the euro. For the currency, the real issue is not one headline number, but whether inflation is heading towards 2%.
Affected instruments: EURUSD, EURGBP, EURJPY, and other EUR-pairs
USD: US Services Purchasing Managers Index (PMI)
August 21, 16:45 MT time
Forecast: TBC | Previous: 53.9
The U.S. services sector entered August from a position of expansion, with the previous S&P Global Services PMI at 53.9, comfortably above the 50 level separating growth from contraction and above the prior 53.8 reading. Services are particularly important because they represent the dominant part of the U.S. economy and can provide an early signal on demand, employment and price pressures.
Another strong reading would suggest that economic activity remains resilient despite restrictive interest rates. That could reinforce the argument for the Fed to remain cautious about easing policy and would generally support the USD. A sharp drop towards 50 would point to fading momentum and strengthen the case for a less restrictive Fed. For the greenback, the question is simple: is the U.S. economy still strong enough to tolerate high rates?
Affected instruments: EURUSD, GBPUSD, USDJPY, and other USD-pairs
