Two Weeks, Four Central Banks, and a New Prime Minister: What Could Move Your Currency Before Month-End

Monday 20th July 2026 | Market Insights | Lamera Capital 

The final two working weeks of July are unusually heavy with event risk, and for any business with a currency payment to make, that matters more than it would in a normal fortnight. 

Sterling has had a strong July, reaching its best level in roughly a year against the euro and trading at comparatively favourable levels against the dollar and yen. The Canadian dollar has also firmed as oil prices have risen. Andy Burnham became Prime Minister today after meeting the King, and is expected to begin appointing his cabinet immediately, with the choice of Chancellor the appointment markets will watch most closely. The fortnight ahead contains four central bank decisions alongside a dense run of inflation, employment and growth data, and any of them could move these rates. Beyond that, August brings its own risk, and we return to it at the end. 

This note is not a directional forecast. It sets out, pair by pair, what is coming and why it matters for that currency, so you can weigh the potential benefit of waiting against the risk of giving back gains that are already available. Jump to the pair that matters to you. 

One theme connects almost all of it. Brent crude has risen sharply and is trading around 86 dollars a barrel as tensions between the United States and Iran have escalated again over the past week. Higher energy prices add to inflation, shift interest-rate expectations and move currencies, and they hit economies differently: exporters such as Canada and the United States are better insulated, while import-dependent economies such as the UK, eurozone and Japan carry the cost. That single thread runs through every pair below. 

GBP/EUR: Near a One-Year High Ahead of the ECB 

For a business selling pounds to buy euros, one of the more favourable levels in the past twelve months. 

Two things drive the pair over the fortnight. The first is UK data, with wage figures on Tuesday and inflation on Wednesday. Both feed directly into expectations for Bank of England policy, and since those expectations are much of what has lifted sterling, a soft reading could take some of that support away, while a firm one could push the pair higher still. The second is the European Central Bank, which meets on Thursday 23rd July and is widely expected to hold its deposit rate at 2.25%. The outcome to watch for is a so-called hawkish hold: holding the rate now, but signalling that if the energy shock persists, a rise becomes likely at the September meeting, when fresh staff forecasts are also due. That kind of message would tend to support the euro and cap this pair, while a more dovish tone focused on weak growth would soften the euro and help sterling higher. 

There is also a political dimension for the pound this week. With Burnham now in office and forming his government, the composition of the cabinet, and above all the identity and stance of the new Chancellor, will shape how markets read the UK's fiscal direction. Early signals of a disciplined approach would tend to reassure and support sterling, while any sense of a looser fiscal stance, or a programme that raises spending questions, could introduce volatility. The new government has also indicated it may open the door to more North Sea oil and gas production, a notable signal at a time when energy supply is the market's central concern. 

Our own assessment is that the Bank of England faces a genuinely difficult decision on 30 July. Higher imported energy costs are adding to inflation, yet a UK rate rise cannot reduce global oil prices and would weigh further on an already subdued economy. The vote looks finely balanced, and because sterling has been carried partly by the expectation of tighter policy, any outcome that falls short of that could see part of the recent advance unwind. For a euro buyer, that is the balance to weigh: the upside of waiting is a possible further improvement, the downside a retracement from levels that are already strong. 

GBP/USD: Recovered slightly

A clear improvement on earlier in the year. For a business selling pounds to buy dollars, a better level than much of the recent range. 

The dominant factor here is the dollar itself, which has been softer than a period of rising geopolitical tension would normally produce. Recent US inflation data has been relatively subdued, easing the pressure on the Federal Reserve, and if that continues alongside supportive UK data, the pair could extend its recovery. 

The risk runs the other way at the end of the month. The United States is a major energy producer and better insulated from higher oil than most, the dollar tends to strengthen when markets turn defensive, and the Federal Reserve meets on 28th and 29th July. Any signal that higher energy prices or a resilient economy could delay rate cuts would tend to lift the dollar and pull this pair back down, and a further escalation in the Middle East would likely do the same by driving demand for dollar liquidity. For a dollar buyer, this is where the case for acting is strongest: current levels are good in a currency that many expect to firm rather than soften once the wider backdrop is fully priced. 

GBP/JPY: Favourable Levels, but a Volatile Risk Profile 

Historically a strong level for a yen buyer. 

The yen has been weak for a straightforward reason. Japanese interest rates remain far below those in the UK, which makes the currency cheap to sell and to fund positions in, and as long as that gap stays wide and markets stay calm, the pair can remain elevated. 

The risk is that this reverses quickly rather than gradually, and it is the sharpest downside of any pair here. The yen has a long history of sudden, violent recoveries when global risk appetite turns and investors unwind those funded positions all at once. The clearest recent example came in August 2024, when a mild US jobs report and a small shift in Bank of Japan policy were enough to trigger a mass unwinding of yen positions, sending global volatility sharply higher and Japanese equities down double digits in a single day. Two things make that worth watching now. The Bank of Japan meets on 30th and 31st July and publishes a fresh outlook, and with higher imported energy adding to Japanese inflation, any hint that it is moving closer to higher rates could set off exactly that kind of move. And the calendar then runs into August, when institutional desks are thinly staffed, liquidity is lower and price swings tend to be amplified, the very conditions in which the 2024 unwind became so violent. For a yen buyer, the rate may stay favourable for a while, but the risk of a fast, sizeable reversal is real, and it rises rather than falls as the month turns. 

GBP/CAD: Two Competing Forces 

The outlook is less clear-cut than the other pairs. 

This one is being pulled in two directions at once. On the sterling side, firm UK data or a more hawkish Bank of England would lift it. Working against that is oil: the Canadian dollar is a major beneficiary of the recent crude rally, since higher energy prices improve Canada's trade position and support demand for the currency. Canadian inflation is released today, with retail sales later in the week and GDP before month-end. While oil stays elevated and Canadian data holds up, the Canadian dollar carries a tailwind that sterling has to fight against, so for a business selling pounds to buy Canadian dollars, the oil price is the variable to watch most closely. 

USD/CAD: For Businesses Selling Dollars to Buy Canadian Dollars 

Down from the highs seen earlier in the month. This has moved against a dollar seller: each US dollar now buys fewer Canadian dollars. 

The same two forces set the direction from here. Sustained high oil and firm Canadian data would keep the Canadian dollar supported and could push the pair lower still, a further deterioration in the rate you receive. Against that, the Federal Reserve's meeting on 28th and 29th July is the key event: a more hawkish message would tend to strengthen the dollar and lift the pair back in your favour, as would any broad move into defensive assets on a geopolitical escalation. Weaker Canadian inflation, retail sales or GDP would work the same way, by taking support away from the Canadian side. Current levels are less attractive for a dollar seller than they were earlier in July, and the fortnight ahead holds several events that could move the pair either way. 

The Fortnight Ahead 

Week one is led by data and the ECB. Canadian inflation lands today, UK employment and wages on Tuesday, UK inflation and Japanese trade on Wednesday, the ECB decision and Canadian retail sales on Thursday, and on Friday a cluster of UK retail sales, UK and eurozone business-activity surveys, Japanese inflation and US PMIs. 

Week two is where the central bank risk concentrates. The Federal Reserve decides on 28th and 29th July, the Bank of England announces on 30 July alongside a full Monetary Policy Report, and the Bank of Japan meets on 30th and 31st July with a fresh outlook. US growth and inflation data and Canadian GDP round out the period. 

Three major central bank decisions fall within three days at the end of the month. That concentration is the single most important feature of the fortnight, and it is why the rates available today should not be assumed to hold. 

A Word on August 

The event risk does not stop at month-end. August is historically one of the least liquid months in the currency market, because institutional trading desks across Europe and the US are thinly staffed while people take summer leave. With fewer participants and wider spreads, even a minor piece of news can produce a disproportionate and rapid move, and geopolitical events plainly do not pause for the summer. The August 2024 yen unwind is the clearest recent illustration, but the pattern recurs. For any business with a payment falling in August, that thinner, jumpier backdrop is worth factoring in now rather than assuming the calmer conditions of recent weeks will carry through. 

What This Means for Your Business 

The common thread across these pairs is that several rates are currently at improved levels for the way most of our clients transact. That is the opportunity. It also changes the decision you face. The question is not simply whether rates could improve further, because they might. It is whether the potential benefit of waiting justifies the risk to the sterling cost, profit margin or cash flow attached to a payment you already know is coming. 

For a business whose priority is certainty, protecting some or all of an upcoming requirement may be more sensible than leaving the whole exposure dependent on the outcome of four central bank meetings, a new government's early decisions, and a thin August market. For others, covering part of the risk while keeping some flexibility may strike the right balance. With this much event risk still ahead, waiting carries a measurable risk of its own. 

If you have a payment due in the coming weeks and would like to talk through the options, whether fixing a rate now or putting protection in place while keeping some flexibility, please speak to the Lamera Capital dealing team. 
 

Lamera Capital provides foreign-exchange and international-payment services to businesses across the UK and Europe. Our Market Insights series covers the macroeconomic and geopolitical developments affecting currency markets. For more analysis, visit lameracapital.com/market-insights.