EUR/USD is struggling to stage a recovery following last week's sharp decline and trading below 1.0050. Meanwhile, GBP/USD continues to trade on the back foot within a touching distance of 1.1800. Economists at DBS Bank expect EUR/USD and GBP/USD to stablilze around 1.00 and 1.18, respectively.

Inflation will keep rising in the coming months in the eurozone and the UK

“In contrast to the US, inflation will keep rising in the coming months in the eurozone and the UK. In September, the European Central Bank and the Bank of England might join the Fed with 50 bps hikes to prevent inflation expectations from de-anchoring.”

“After last week’s heavy losses, EUR/USD and GBP/USD may find support around parity and 1.18 respectively.”