President Trump's threat to impose up to 30% tariffs on EU imports from August 1 has drawn strong condemnation from European officials, who deem the measure "unacceptable" and potentially capable of terminating normal trade relations. In rapid response, the European Commission drafted a retaliatory tariff list targeting $84.1 billion worth of American goods, including Boeing aircraft, bourbon whiskey, automobiles, chemicals, medical devices, electrical equipment, and agricultural products. Despite having the retaliation framework prepared, EU representatives demonstrated unprecedented unity during the July 14 ministerial meeting in Brussels, maintaining hopes for negotiated resolution. EU Trade Commissioner Maroš Šefčovič emphasized readiness to implement countermeasures should negotiations collapse, declaring: "European corporate interests are non-negotiable."

At the annual Mansion House speech in London, Bank of England Governor Andrew Bailey criticized the Trump administration's trade war approach as counterproductive. Bailey asserted that such unilateral measures fail to address global economic imbalances while harming households worldwide. He specifically urged China and the United States to collaboratively resolve "unsustainable" trade and financial distortions that fuel political tensions. "The rules governing international economic integration require multilateral consensus," Bailey contended. "Unilateral imposition by any single nation—regardless of its influence—cannot deliver lasting stability."

Market focus now shifts to key economic indicators including UK June CPI, UK retail price index, US PPI, and US industrial production data.

**Dollar Index** The greenback climbed steadily to a 16-day peak near 98.60, bolstered by technical buying above the 98.00 threshold and diminishing Fed rate-cut expectations. The in-line US CPI reading provided additional upward momentum. Resistance emerges near 99.00 with support at 98.00.

**EUR/USD** The euro dipped toward the critical 1.1600 level, barely holding above at 1.1610. Pressure mounted from both the Fed's reduced easing expectations and potential ECB dovish shifts triggered by US tariff threats. The satisfactory US inflation data further weakened the single currency. Resistance forms near 1.1700 while 1.1500 offers key support.

**GBP/USD** Sterling breached the 1.3400 handle amid the dollar's broad-based strength fueled by cooling Fed easing bets, solid US inflation figures, and risk-off sentiment. Growing expectations for a Bank of England rate cut in August exacerbated the pound's decline. Resistance now sits at 1.3500 with support at 1.3300.