It’s been a good weekend on and off the pitch. England are into the World Cup quarter-finals, and the pound is starting the week at its strongest level against the euro in a year. Here’s what’s been driving that, and what could move rates before the week is out.
Latest market insights:
Pound to euro:
Sterling at a one-year high.
- The pound is up around 1.1% against the euro over the past week, reaching its best level since July 2025. Two things have driven that move.
- First, Andy Burnham’s opening speech as Prime Minister frontrunner went down well with markets. He reaffirmed his commitment to the current government’s fiscal rules, which reassured investors who had been worried about looser spending under new leadership.
- Second, eurozone inflation came in lower than expected last Wednesday, falling from 3.2% in May to 2.8% in June. That was below the 3.0% markets had anticipated, and it has led investors to scale back their bets on the European Central Bank raising interest rates again. When the chances of an ECB rate hike fall, the euro tends to soften, and that’s exactly what happened.
- For property buyers, a 1% move on a €400,000 purchase equals €4,000, money that comes straight off your budget. With the pound at a one-year high, now could be a good moment to think about protecting that rate. A forward contract lets you lock in today’s rate for a future transfer, while a rate order lets you set an upper or lower limit, and if either is achieved we’ll automatically buy your currency, even if it’s during England’s next match, to make sure you don’t miss out on a rate you’re happy with. Speak to your Lumon currency specialist to find out which option suits your situation best.
US dollar to euro:
Dollar weakens after jobs data disappoints
- Thursday’s US jobs report was weaker than expected, with 100,000 jobs added in June against a consensus forecast of around 130,000. That has led investors to scale back bets on the Federal Reserve raising interest rates later this year, taking some of the strength out of the dollar.
Pound to US dollar:
Pound recovers as dollar softens
- Sterling is up around 1.3% against the dollar over the past week, recovering some of the ground lost in June. Bank of England Governor Andrew Bailey struck a firm tone at last week’s central banking forum in Portugal, confirming that interest rate cuts are not on the agenda for now, which has helped underpin the pound against a softer dollar backdrop.
What to watch this week:
Tuesday 7 July:
- The Bank of England publishes its Financial Stability Report. This is less about interest rates and more about the health of the financial system, but any comments on the economic outlook could move sterling.
Wednesday 8 July:
- The minutes from the Federal Reserve’s June meeting are published. After last week’s weaker jobs data, investors will be looking for any clues about the Fed’s thinking on interest rates. A cautious tone could soften the dollar further.
Thursday 9 July:
- Eurozone unemployment figures for May are published. A higher reading could add to concerns about the eurozone economy and weigh on the euro, pushing GBP to EUR higher. ECB policymakers Cipollone and Elderson are also speaking, and markets will be watching for any signals on whether a second rate hike is still on the table for later in the year.
Middle East:
- The US-Iran peace process is continuing, with talks ongoing in Qatar. The situation remains fragile, and any fresh escalation could move markets quickly, particularly the euro, which is sensitive to energy prices.
If you have an international transfer coming up in the next few weeks or months, for a property purchase, a pension payment, supporting family abroad, or any other reason, the events of this week are a useful reminder that exchange rates can move quickly, and not always in the direction you’d hope.
The good news is that you don’t have to simply wait and see what happens. Speaking with a currency specialist costs nothing and carries no obligation. They can talk you through your options, including spot contracts for transfers you need to make now, and forward contracts for transfers you’re planning further ahead, and help you understand how today’s rate movements might affect your specific situation.
Contact Lumon on +44 (0)204 506 5672 for a free, no-obligation conversation and discover what options you have available to help.
