Economic Update

13 July 2026

Oil takes centre stage as geopolitical risks escalate

Market data is likely to take a back seat this week as political developments and the conflict involving Iran continue to influence broader market sentiment. Brent crude oil has risen again as fewer vessels pass through the Strait of Hormuz, disrupting supply flows. Brent crude is now trading above USD 80 per barrel and may continue to move higher as US-Iran strikes continue, following attacks on a number of vessels transiting the Strait.

Regional tensions are also intensifying. Iran retaliated against US strikes on military sites with attacks targeting Kuwait, Oman, Bahrain, Jordan and the UAE. This presents a more complex backdrop should neighbouring Gulf states become more actively involved in the conflict.

Sterling supported as rate hike expectations persist

The UK calendar remains particularly light during the first half of the week. Tomorrow evening, Bank of England Governor Andrew Bailey is due to speak.

Market expectations continue to suggest that one further 25bp rate hike remains possible later this year, a factor that has helped keep sterling supported. This comes as the UK is expected to see the appointment of another Prime Minister, most likely next week.

Inflation data and Warsh testimony in focus

Away from developments in the Middle East, Tuesday brings US Consumer Price Index (CPI) data. Inflation is forecast to slow from 4.2% to 3.8% year-on-year. While this would represent a moderation in inflationary pressures, the level would remain elevated relative to many developed economies and may still support the case for at least one further rate hike later this year.

Elsewhere, Federal Reserve Chair Kevin Warsh is scheduled to testify before Congress twice this week. He will first appear before the House Financial Services Committee on Tuesday, followed by the Senate Banking Committee on Wednesday.

Both appearances are likely to attract close market attention, with investors assessing his views on interest rates and the broader policy outlook. Any signals on the future direction of monetary policy could have a noticeable influence on US dollar performance.

Lagarde speech provides the euro’s main focal point

For the euro, Tuesday's focus will be European Central Bank President Christine Lagarde's speech.

Her comments on the monetary policy outlook could generate volatility in the single currency, particularly as this represents the only major scheduled event for the region this week. Meanwhile, EUR/GBP remains close to a 12-month low.

China slowdown and NZ recovery highlight global divergence

On Wednesday, Chinese GDP growth is forecast to slow from 5.0% to 4.5% year-on-year. Later in the day, the Bank of Canada's interest rate decision is expected to leave rates unchanged at 2.25%.

The New Zealand dollar has also shown some signs of recovery. New Zealand's services sector returned to expansion in June, with the index rising from 48.0 to 50.6, moving back above the key 50 level that separates contraction from growth. The improvement follows similar signs of strengthening within the country's manufacturing sector.

Author 

Views expressed in this commentary are those of the author, and may differ from your appointed Moneycorp representative. This commentary does not constitute financial advice. All rates are sourced from Bloomberg and forecasts are taken from Forex Factory.