US Dollar Outlook: Will Today's Jobless Claims Drive GBP, EUR and USD Exchange Rates?

Key Highlight

• Markets have become more cautious after a sharp decline in Asian equities, increasing demand for safe haven currencies while giving the US dollar some short-term support. Despite this, the dollar remains close to multi week lows after three consecutive days of losses as concerns around Federal Reserve independence continue to weigh on sentiment.

• The main event for markets today is the US Initial Jobless Claims report at 13:30 BST. A weaker than expected result is likely to increase expectations of a softer US economy and could extend recent dollar weakness. A stronger reading would improve confidence in the US labour market and may help the dollar recover.

• The euro continues to benefit from improving Eurozone economic data, with the Services PMI rising to 51.7 in July, its strongest reading since February, reinforcing confidence in the region's economic outlook.

Market Recap

The US dollar weakened for a third consecutive session as optimism surrounding a potential agreement between the US and Iran to reopen the Strait of Hormuz reduced demand for safe haven assets. At the same time, stronger Eurozone economic data supported the euro, with the Services PMI exceeding expectations at 51.7.

The Japanese yen remained under pressure despite last week's coordinated intervention by Japan and the US, as investors continue to believe that stronger support would require further Bank of Japan rate increases alongside a pause in Federal Reserve policy.

Although Minneapolis Fed President Neel Kashkari suggested interest rate increases should begin gradually, markets largely ignored the comments, indicating investors are not yet expecting a new cycle of US rate hikes.

Elsewhere, the Canadian dollar strengthened as oil prices stabilised near $80 per barrel. European currencies including the Swiss franc, Norwegian krone and Swedish krona also gained against sterling, while comments from Bank of England Chief Economist Huw Pill highlighted ongoing economic uncertainty, limiting further gains for the pound.

Market Overview

Today's US jobless claims data is expected to be the primary driver for currency markets. While weaker Asian equity markets have temporarily increased demand for the US dollar, the direction of today's labour market data is likely to determine whether the recent decline in the dollar continues or begins to reverse.

EUR/USD

The euro holds a modest near term advantage with 55% conviction, although the pair remains within a broad trading range. Weak US employment data could see the euro test higher resistance levels, while stronger figures would support the dollar. Over the medium term, the outlook remains balanced, with expectations that the dollar stays relatively resilient through the third quarter before easing later in the year as the interest rate gap between the Federal Reserve and the European Central Bank narrows.

For businesses exchanging €250,000, a move to resistance would make buying dollars around $1,675 cheaper, while a move towards support would increase costs by approximately $5,600.

GBP/USD

Sterling has a slight near term advantage with 55% conviction but is approaching an important resistance level. The outcome of today's US labour market data will be the key influence, while concerns over Federal Reserve independence and weaker global risk sentiment continue to create short term volatility.

The medium term outlook also slightly favours sterling, supported by relatively higher UK interest rates, although expectations for further Bank of England rate rises have eased. Persistent US inflation remains the biggest factor supporting the dollar.

For businesses exchanging £250,000, reaching resistance would reduce the cost of buying dollars by approximately £962, while a move towards support would increase costs by around £2,007.

GBP/EUR

The euro is favoured in the near term with 60% conviction as the pair trades towards the lower end of its recent range. The UK Construction PMI will be monitored today, although the sector remains in contraction and weaker than expected data could add further pressure to sterling.

The medium term outlook remains balanced, with future Bank of England and European Central Bank interest rate decisions expected to have the greatest influence over the coming months.

For businesses exchanging £250,000, a move to resistance would reduce the cost of buying euros by approximately £2,460, while a move towards support would increase costs by around £551.

Bottom Line

The recent weakness in the US dollar has been driven by improving geopolitical sentiment and renewed concerns surrounding Federal Reserve independence. However, today's US Initial Jobless Claims report at 13:30 BST is expected to be the decisive event for currency markets. Businesses with upcoming international payments should monitor today's release closely, as it could create meaningful movement across the major currency pairs and present opportunities to improve exchange rates.

6th August  2026

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