FX.co ★ Sterling Falls to 10-Week Low

The British pound dropped to $1.336, marking its lowest point since May 20, as lackluster UK economic data turned market attention from inflation concerns to the challenge of sluggish growth. At the same time, optimism surrounding trade agreements buoyed the US dollar. Despite warmer weather leading to increased food sales, the overall economic momentum in the UK remains precarious, as highlighted by recent disappointing PMI figures. This situation has heightened expectations that the Bank of England might reduce interest rates by 25 basis points in August, with the possibility of another cut by the end of the year to prioritize economic growth support. Concurrently, the US dollar gained strength following a trade agreement between the US and the EU that imposed 15% tariffs on most EU exports, including automobiles. This agreement, announced by President Trump and EU President von der Leyen, allayed fears of an impending trade war just before a tariff deadline, providing an additional lift to the dollar.