Here's your Daily Currency Update – 31 July 2026

• Bank of England held rates at 3.75% on Thursday with a tighter-than-expected 6-3 vote – three members wanted a hike.
• Minutes signalled readiness to raise if energy prices from the Middle East keep pushing inflation higher.
• Sterling held its ground but stayed range-bound as traders digested the split decision.
• Eurozone flash CPI rose to 2.9% as expected; UK house prices cooled slightly to 1.8% annual growth.
• Severe wildfires across France and Spain disrupted travel and business – relevant for clients with European exposure.
• Current mid-market ranges: GBP/EUR €1.1587–€1.1677 | GBP/USD $1.3289–$1.3411.

This week belonged to Threadneedle Street. On Thursday the Bank of England kept Bank Rate at 3.75% for a fifth successive meeting, but the 6-3 vote (Huw Pill, Megan Greene and Catherine Mann preferring a 25 bp rise) was more hawkish than the 7-2 split markets had priced. The accompanying minutes and Monetary Policy Report leaned heavily on upside risks from elevated oil prices linked to renewed Middle East tensions, while noting that underlying disinflation and a looser labour market still justify the current level of restrictiveness. Sterling initially firmed then settled as traders concluded the next move remains data-dependent rather than imminent.

Elsewhere, Friday's Eurozone flash CPI matched the 2.9% forecast and UK Nationwide house prices edged up just 0.1% month-on-month. Beyond the data, large wildfires in south-western France and parts of Spain forced evacuations, closed roads and railways, and disrupted tourism and wine production. For clients – past and present – with property, supply-chain or travel exposure in those regions, the practical effects on business continuity and insurance claims have been real. Markets head into the August lull with GBP still sensitive to any fresh energy-price spikes and the next firm BoE guidance not due until 17 September.

• The 6-3 hold kept sterling supported versus the euro; the three dissenting votes for a hike limited any post-decision sell-off.
• Eurozone CPI at 2.9% (core 2.5%) removed one source of euro weakness but did not reverse the cross.
• Minutes' emphasis on energy-driven upside risks leaves the door open for a September reconsideration if oil stays elevated.
• Week-ahead calendar is thin until mid-month UK data; relative rate expectations versus the ECB remain the main driver.

• BoE decision and minutes provided a short-lived boost; US data later on Friday (Michigan sentiment, Employment Cost Index) kept the dollar competitive.
• Energy-price uncertainty featured heavily in the minutes and continues to act as a two-way risk for sterling.
• No major UK political statements moved the pair in the final 24 hours.
• Next catalyst remains US labour-market data next week; GBP's reaction function is now tightly linked to whether inflation risks materialise before the September meeting.

• Eurozone CPI matched expectations at 2.9%; the modest core upside (2.5%) offered limited support.
• Dollar held the upper hand into the US data window, producing mild divergence from the GBP crosses.
• Wildfire-related growth concerns in southern Europe added a quiet background negative for the euro.
• Week-ahead focus shifts back to US payrolls; any sustained energy shock would favour relative ECB caution versus the Fed.