The US dollar is forecast to trade in a narrow band this week, with GBP/USD expected between 1.33 and 1.37, GBP/EUR between 1.16 and 1.19, and EUR/USD between 1.14 and 1.17. UK inflation on Wednesday and the Federal Reserve’s July minutes the same evening are the two releases most likely to break the range.
Sterling ended last week close to its strongest level against the dollar since mid-July. On Friday 14 August the European Central Bank’s daily reference rates put the euro at 1.1567 dollars and 0.85450 pounds, which implies roughly 1.3537 on GBP/USD and 1.1703 on GBP/EUR. You can check the live level on our currency converter before you read the rest of this.
Will the dollar rise or fall next week?
The dollar could recover ground this week if the Federal Reserve’s July minutes show broader support for a rate increase than the vote alone suggested, and could weaken further if UK inflation surprises to the upside and pulls sterling higher. Neither outcome is priced with conviction, which is why a 1.33–1.37 band on GBP/USD is the realistic expectation rather than a directional call.
Two data points from the week just gone frame it. US payrolls fell by 23,000 in July and revisions cut May and June by a combined 103,000, with unemployment at 4.1% — a labour market that is plainly cooling. But US consumer prices still rose 3.4% over the year to July, and core inflation at 2.5% remains above the Fed’s target. A softening jobs market alongside sticky prices is the hardest combination for a central bank to answer, and it is why the dollar has traded sideways rather than trending.
What is driving the dollar, the pound and the euro right now?
Interest rate differentials remain the dominant driver, and all three central banks are on hold with a hawkish minority pushing to move higher. That configuration is unusual and it matters for how the market reacts to data: a hot inflation print no longer just delays a cut, it pulls a possible increase forward.
| Central bank | Policy rate | Last decision | Vote | Next decision |
|---|---|---|---|---|
| Bank of England | 3.75% Bank Rate | Held, announced 30 July 2026 | 6–3, with three preferring 4.00% | 17 September 2026 |
| Federal Reserve | 3.50%–3.75% target range | Held, 28–29 July 2026 | 9–3, with three preferring an increase | 15–16 September 2026 |
| European Central Bank | 2.25% deposit facility | Held, 23 July 2026 | Not pre-committing to a rate path | September 2026 |
The pound’s yield advantage is wide. Bank Rate at 3.75% sits 150 basis points above the ECB’s deposit rate, and that gap is the single clearest reason GBP/EUR has held above 1.16 through the summer. Against the dollar the differential is close to neutral, which is why GBP/USD reacts to news rather than drifting.
Energy is the wild card behind all of it. The ECB noted in July that the outlook for energy prices, while highly volatile, remains significantly elevated compared with levels before the Middle East conflict. The Bank of England made the same point in its own words, warning that UK CPI inflation “is expected to rise later this year as the effects of higher energy prices continue to pass through”. Both statements point the same direction: the disinflation of the past two years is not finished, and it is no longer a one-way street.
What economic data is out this week, 17–21 August 2026?
The UK carries an unusually heavy data burden this week — three top-tier releases in four days against one scheduled event for the US. Historically that concentrates sterling volatility mid-week rather than spreading it evenly. All times are British Summer Time.
| Day | Time | Release | Why it matters |
|---|---|---|---|
| Monday 17 | 13:30 | Canada CPI (July) | Sets the tone for CAD; limited spillover to GBP |
| Tuesday 18 | 07:00 | UK labour market overview | Wage growth is the MPC hawks’ key input |
| Tuesday 18 | 10:00 | German ZEW economic sentiment | First read on eurozone confidence this month |
| Wednesday 19 | 07:00 | UK CPI (July) | The week’s biggest sterling event |
| Wednesday 19 | 10:00 | Euro area final HICP (July) | Confirms the 2.9% flash estimate |
| Wednesday 19 | 19:00 | FOMC minutes (July meeting) | Detail behind the three dissents |
| Thursday 20 | 02:30 | Australian employment | AUD-specific; watch if you hold AUD exposure |
| Thursday 20 | 13:30 | US jobless claims, Philadelphia Fed survey | Weekly check on the labour market cooling |
| Friday 21 | 07:00 | UK retail sales (July) | Consumer resilience after the GDP beat |
| Friday 21 | 09:30 | UK flash composite PMI | Forward-looking growth signal |
| Friday 21 | 14:45 | US flash composite PMI | Last major US datapoint before the weekend |
GBP/USD forecast: what range is realistic this week?
GBP/USD is forecast to trade between 1.33 and 1.37 this week, with the upper half of that band more likely if UK inflation comes in firm on Wednesday morning.
The market’s read on the Fed shifted twice in a fortnight. After the weak July payrolls report on 7 August the dollar sold off; after the CPI release on 12 August, which showed headline inflation easing from 3.5% to 3.4% and core easing from 2.6% to 2.5%, expectations for a September increase were pared back. A dollar that is neither clearly cutting nor clearly hiking tends to range-trade, and that is what the pair has been doing.
Wednesday’s FOMC minutes are the risk. If the record shows the three dissenters were closer to carrying the room than the 9–3 vote implies, the dollar may firm and push GBP/USD toward the lower end of the range. For the medium-term picture, see our GBP/USD forecast and the broader dollar index outlook.
GBP/EUR forecast: what range is realistic this week?
GBP/EUR is forecast to hold between 1.16 and 1.19, with the rate differential providing a floor and Friday’s eurozone flash PMIs the main downside risk.
The UK’s underlying position is mixed in a way that should keep the pair rangebound. GDP grew 0.4% in the second quarter with June alone up 0.3%, which is respectable. But unemployment has climbed to 4.9% and payrolled employees fell by 85,000 over the year to May. Regular pay growth of 3.4% is now running below services inflation of 3.6% — and that specific gap is what the three hawkish MPC members are watching, because it determines whether wages keep feeding price rises or stop doing so.
Euro area inflation, meanwhile, ticked up to 2.9% in July from 2.8% in June, with services at 3.3%. The ECB has room to stay still. Our pound to euro forecast covers the longer horizon.
EUR/USD forecast: where could the euro trade?
EUR/USD is forecast to trade between 1.14 and 1.17 this week. The euro’s problem is that its inflation is drifting up while its central bank is the least likely of the three to act — a combination that limits both directions. Friday’s flash PMIs for Germany, France and the bloc are the events to watch. Our euro to dollar forecast sets out the six-month view.
What does this mean for your currency transfer?
A four-cent range on GBP/USD is not a rounding error on a large transfer. On £500,000, converting at an illustrative 1.37 rather than 1.33 is $685,000 versus $665,000 — a $20,000 difference on the same money, decided by timing alone.
The euro side is narrower but still material. On £250,000, an illustrative 1.19 gives €297,500 against €290,000 at 1.16 — €7,500 apart. Put differently, a 2% move on a £400,000 transfer is £8,000 of purchasing power, whichever pair you are trading.
If you have a fixed obligation this week — a completion date on a US property, a supplier invoice in euros, a deposit due on a Spanish purchase — the range above is your exposure, not a forecast to trade against. Guidance on the specific case of buying dollars is set out in should I buy US dollars now?, and the mechanics of a dollar transfer in our guide to sending money to the USA from the UK.
How can you manage timing and risk in a rangebound market?
Three tools cover most situations, and they are not mutually exclusive.
- Forward contracts fix today’s rate for settlement on a future date, typically for a deposit of 5–10% of the contract value. They remove the range from the equation entirely. See how forward contracts work for private clients.
- Market orders execute automatically if the rate reaches a level you set, which suits anyone with no fixed deadline. A stop-loss order does the reverse, capping the downside. Both are explained in our guide to stop-loss and market orders.
- Splitting the transfer across two or three tranches averages your rate rather than betting the whole sum on one moment. It is the least dramatic option and often the most durable one for large amounts.
The margin question is separate from the timing question, and usually larger. High-street banks typically apply 3–4% to a currency transfer; a specialist broker generally works on 0.2–1% depending on size. On £500,000 that difference is between £10,000 and £19,000 before the rate has moved at all.
Frequently asked questions
Will the dollar rate increase next week?
The dollar could strengthen if Wednesday’s FOMC minutes reveal broader support for a September rate increase, and could weaken if UK inflation runs hot the same morning. GBP/USD is forecast to stay within 1.33–1.37, so any move is more likely to be a few cents than a trend change.
What is the US dollar forecast for this week?
The dollar is forecast to range-trade, with GBP/USD between 1.33 and 1.37 and EUR/USD between 1.14 and 1.17. The Federal Reserve’s July minutes on Wednesday evening are the only scheduled US event with real potential to move it.
What is the biggest event for the pound this week?
UK CPI for July, released by the ONS at 07:00 on Wednesday 19 August. Inflation was 2.6% in the year to June, and the Bank of England has said it expects the rate to rise later this year as higher energy prices pass through. A figure above expectations may strengthen sterling by reinforcing the case made by the three MPC members who voted for 4.00%.
Will the Bank of England raise interest rates?
The MPC held Bank Rate at 3.75% on 30 July 2026 by 6 votes to 3, with the minority preferring an increase to 4.00%. The Committee said risks to the inflation outlook are tilted to the upside. The next decision is on 17 September 2026, and no decision is guaranteed in either direction.
Why has the pound held up against the euro?
Bank Rate at 3.75% is 150 basis points above the ECB’s 2.25% deposit rate. That yield gap makes sterling deposits more attractive to hold, and it has kept GBP/EUR above 1.16 despite UK unemployment rising to 4.9%.
Should I fix my rate now or wait?
That depends on whether your payment date is fixed. If it is, a forward contract removes uncertainty and lets you budget precisely; if it is not, a market order lets you target a better level without watching screens. Clients with large sums frequently do both — fixing part of the amount and leaving the rest to an order.
How much could the rate move in a single week?
A two-cent move on GBP/USD in a data-heavy week is unremarkable. On a £500,000 transfer, two cents is $10,000. That is why timing matters more on large transfers than on small ones, and why splitting the amount reduces the consequence of getting the timing wrong.
Where can I see last week’s forecast?
Our forecast for the week of 11 August 2026 sets out how the market entered this one. Every edition is archived on the weekly currency forecast hub, published each Sunday.
Sources
- Bank of England, Monetary Policy Summary and minutes, July 2026
- US Bureau of Labor Statistics, Consumer Price Index — July 2026 (released 12 August 2026)
- US Bureau of Labor Statistics, Employment Situation — July 2026 (released 7 August 2026)
- Office for National Statistics, Consumer price inflation, UK: June 2026
- Office for National Statistics, GDP monthly estimate, UK: June 2026
- European Central Bank, Monetary policy decisions, 23 July 2026
- Eurostat, Euro area annual inflation, flash estimate for July 2026
- Federal Reserve, FOMC meeting calendar 2026
Speak to a specialist before Wednesday’s data
If you have a transfer landing this week, it is worth a conversation before the UK inflation figure lands on Wednesday morning rather than after it. Request a rate for your transfer and a dedicated Cambridge Currencies specialist will call you back — every transaction is completed by phone with the same named person, so the rate and the margin are disclosed to you before anything is booked.
This article is market commentary and general information only. It is not a recommendation to buy or sell any currency, and exchange rates can move in either direction.
