Written and reviewed by Kevin Nerway · Last verified 31 July 2026
Key Takeaways
- GBP/USD fell 0.13% to 1.3448 at 05:45 ET on July 31, while EUR/USD slipped 0.20% to 1.1505.
- The dollar’s earlier selloff accelerated after June core PCE rose only 0.1% month-on-month and Q2 US GDP expanded at a 1.5% annualized rate.
- Eurozone July headline CPI rose to 2.9% year-on-year from 2.8% in June; core inflation reached 2.5% and services inflation 3.3%.
- ING said EUR/USD could continue finding buyers around 1.150, but viewed moves above 1.160 as unlikely to be sustainable without materially lower US rate pricing and easing Middle East tensions.
GBP/USD Slips 0.13% as the Dollar Finds Its Footing
I am watching a modest dollar stabilization rather than a confirmed reversal in the broader post-FOMC move. On July 31 at 05:45 ET, GBP/USD traded at 1.3448, down 0.13% on the day, while EUR/USD fell 0.20% to 1.1505. The trigger was a tentative bid for the dollar after its sharp decline following what markets interpreted as a dovish Federal Reserve surprise and amid Japanese yen intervention.
our research describes sterling’s pullback as entirely dollar-driven, not the result of a new UK economic or policy development. That distinction matters: it leaves GBP/USD exposed primarily to changing US-rate expectations rather than a fresh deterioration in the UK outlook. Traders assessing the macro backdrop can use central bank policy divergence in institutional flows to frame how shifts in relative rate expectations can drive major FX pairs.
Soft US Inflation and Growth Repriced Dollar Expectations
The market mechanism is straightforward. June core PCE-the Federal Reserve’s preferred inflation measure-rose only 0.1% month-on-month, while US Q2 GDP grew at a 1.5% annualized pace, below expectations. Together, those releases gave investors less reason to expect forceful policy tightening, reinforcing the dollar selloff already underway after the FOMC outcome.
market reporting also reported that Fed Chair Kevin Warsh’s ambiguity about the Fed’s reaction function compounded the move. ING strategist Francesco Pesole said there could still be room for further USD long-squeezing and that he remained reluctant to call a bottom in the dollar decline. The DXY index briefly fell below 100 on July 30, its lowest level since Warsh’s June press conference had boosted the greenback.
For me, that means the key risk is not simply whether the dollar bounces for a session. It is whether incoming US information forces markets to reverse their view that the Fed is unlikely to turn more restrictive. This is a rate-expectations trade first and a chart trade second.
Market Impact Snapshot
| Asset | Direction | Confidence |
|---|---|---|
| GBP/USD | Bearish on July 31 session | High |
| EUR/USD | Bearish on July 31 session | High |
| US Dollar | Stabilizing after earlier selloff | Medium |
| DXY Index | Bearish over the prior session, after dipping below 100 | High |
| Eurozone rate expectations | Bullish support from firmer July inflation | Medium |
EUR/USD Holds the Inflation Advantage, With 1.150 in Focus
EUR/USD slipped to 1.1505 after breaching 1.150 for the first time in weeks during the prior session. Yet the euro’s underlying rate story differs from sterling’s. Eurostat data cited by market reporting showed July headline inflation at 2.9% year-on-year, up from 2.8% in June. Core inflation accelerated to 2.5%, while services inflation rose to 3.3%.
Those numbers reinforce the case for further European Central Bank tightening, even though the ECB held rates unchanged earlier in July and warned that uncertainty around the Iran war remained high and that the full energy-shock effect had yet to play out. The market’s immediate reaction was lower EUR/USD, but I would separate that day-to-day dollar rebound from the relative policy signal in the inflation data.
ING’s levels are the only levels I can verify from our research: it sees buyers around 1.150 and a near-term ceiling near 1.160. The firm cautioned that a sustained move above 1.160 would likely require materially lower US rate pricing and reduced Middle East tensions. Traders should treat those as analyst views, not guaranteed support or resistance.
What I Am Watching Into Next Week
No Fed speakers were scheduled for July 31, but our research says next week’s US calendar is packed and may provide the next directional catalyst. I will be focused on whether the data support the weak-inflation, softer-growth narrative that fueled the dollar selloff, or whether they challenge it.
A continuation of softer US data would keep the pressure on dollar longs and could restore support to GBP/USD and EUR/USD. Conversely, data that prompt markets to price less policy easing-or more policy tightening-would favor a more durable dollar recovery. With the Fed’s communication under scrutiny, individual members’ remarks may matter more if dissenting FOMC votes become more common.
Before trading event-driven FX volatility, traders should review news event trading policies across prop firms, since some programs restrict execution around major releases or apply different treatment to profits generated during news windows. I would also use a risk-to-reward planner before increasing exposure in correlated dollar pairs.
Practical Context for Prop-Firm Traders
For prop-firm traders, this is the kind of environment where a small move in GBP/USD or EUR/USD can mask a larger change in macro pricing. The risk is concentrated exposure: being long both pairs is largely a shared short-dollar position, not two independent ideas. That makes drawdown exposure during rate decision windows especially relevant when data and Fed communication are rapidly changing rate expectations.
I would favor selective execution during the most liquid London and US sessions rather than chasing the first reaction to a headline. our research does not provide spread, liquidity, or volatility measurements, so I cannot quantify current execution conditions. But a crowded dollar reversal after a large prior move can be vulnerable to sharp intraday repricing.
For traders selecting an evaluation, prop firms with the best rules for rate-driven volatility can help identify whether a program’s daily-loss, news-trading, and consistency conditions fit an event-driven FX strategy. Those approaching a withdrawal threshold may also want to check how quickly firms pay out profits, because timing of a payout is a separate issue from the market call itself.
Finally, I would not treat Friday’s modest pound decline as evidence that the post-FOMC dollar trend has ended. our research explicitly characterizes sterling’s move as consolidation rather than a reversal. My bias remains neutral on the immediate dollar direction until the next US data and Fed-related signals clarify whether the repricing has further to run.
Frequently Asked Questions
Why did GBP/USD fall on July 31
GBP/USD fell 0.13% to 1.3448 at 05:45 ET as the dollar found tentative stability after a broader post-FOMC selloff. market reporting said the move did not reflect a shift in UK fundamentals and was instead driven by the dollar.
What does the June core PCE reading mean for the dollar
June core PCE rose only 0.1% month-on-month, according to our research. Alongside 1.5% annualized Q2 GDP growth, the data intensified the view that the Fed may be reluctant to deliver more forceful tightening, which weighed on the dollar earlier in the week.
What does the inflation report mean for EUR/USD
Eurozone headline inflation accelerated to 2.9% year-on-year in July, with core inflation at 2.5% and services inflation at 3.3%. The figures support the case for further ECB tightening, although EUR/USD still declined 0.20% in the July 31 session as the dollar steadied.
What should prop-firm traders watch next
our research points to a busy US calendar next week as the next potential catalyst for FX direction. Traders should confirm their firm’s news-event restrictions and account-loss rules before holding GBP/USD or EUR/USD through high-impact US releases.