US headline inflation has slightly risen to 3.2%, accompanied by a core reading of 4.7%. This strengthens the belief that the Federal Reserve (Fed) will maintain steady interest rates throughout the rest of this year. Anticipated rate cuts are projected to commence early next year, as the focus shifts from managing inflation to promoting growth.

The Bank of England is widely expected to increase interest rates once again in the upcoming month. There's potential for another hike in November as well, as the Bank continues its struggle against persistently high inflation. The committee faces the significant challenge of reducing inflation without causing lasting damage to the economy.

Crucial data from the UK is set to be released this week, including the latest inflation report, employment figures, and retail sales data. These factors play a pivotal role in shaping monetary policy and are likely to contribute to increased market volatility.

The European Central Bank might have reached the zenith of its interest rate hikes after the recent increase. However, the possibility of another hike later in the year remains contingent on data trends.

Meanwhile, the Chinese economy continues to experience notable weakening, which has a negative impact on market sentiment and exerts a drag on global economic growth.

In the realm of financial exchanges, holiday trading conditions have led to reduced liquidity and a lack of definitive market sentiment. The GBP/USD currency pair is trading around 1.2700, while the GBP/EUR pair remains situated towards the lower end of the established range of 1.1500 to 1.1750.