Sterling begins the week having stopped its recent slide against the euro and gaining momentum against the US dollar. The overall positive backdrop for sterling exchange rates was three Bank of England policymakers voting to raise rates on Thursday. This was a stronger challenge than markets had expected and a reminder that UK inflation remains the Bank’s main concern. It contrasted with the US, where the exact same threat of inflation was met with a more dovish response and the dollar floundered.

However, potentially riding to US Federal Reserve chair Kevin Warsh’s rescue was President Trump, who claimed once again that a peace deal is close and called off more attacks on Iran. That good news has hurt the dollar, but is only part of the oil story. OPEC+ agreed on Sunday to raise production modestly in September, which should moderate oil prices and offer consumers some relief after a turbulent month for energy prices.

The increase is relatively small, though. Shipping through the Strait of Hormuz and the Red Sea remains disrupted, while the diplomatic picture between Washington and Tehran can change remarkably quickly.

The euro found support on Friday, based on both the bad news of inflation coming in higher than expected across the bloc, but also better than expected economic growth.

The US dollar struggled after disappointing GDP data. The manufacturing Purchasing Managers Index (PMI) arrives today, followed by final results for Services and Construction over subsequent days. These have the power to impact exchange rates, but the main focus may be on American employment tomorrow and Friday. Markets will also be watching whether Sunday’s cautious oil optimism survives the reopening of global trading.