Stefano Rebaudo

Next week's much-anticipated U.S. and Japanese central bank meetings could bring monetary tightening too.

The European Central Bank is widely expected to hike interest rates on Thursday, erring on the side of caution as the U.S.-Iran wardrags on, keeping oil prices high ​and raising inflation again.

Money markets are bracing for an increasingly hawkish European ​Central Bank, wagering that geopolitical tensions will complicate its inflation battle and keep price pressures stubborn enough to lift the key ‌deposit rate to almost 3% by late 2027.

Global equities rose on Thursday as investors pared back their bets on a U.S. rate hike, while oil prices fell ​more than 2% as higher inventories and lower global demand forecasts offset geopolitical concerns.

Sterling hovered around its one-month high against the dollar on Wednesday as investors braced for a raft of British and U.S. economic ​data later this week.

Sterling broke a three-day winning streak against the dollar while dropping versus the yen as investors closely watch the U.S. rate path and ​authorities' interventions to support the Japanese currency.

Sterling rose against a broadly weaker dollar on Tuesday after John Healey was appointed as Britain's new finance ​minister, with investors awaiting fresh signals on the government's ‌fiscal policy.

The European Central Bank meets again on July 23, with oil prices back at the top of the worry list for policymakers.

Swings in oil prices fueled a moderately volatile session for European government bonds on Monday, and inflation-sensitive markets fully priced two additional ECB rate ​hikes by early 2027.

Sterling hovered near its highest level in more than two months against the dollar, and edged lower versus the euro, as concerns over Britain's ​fiscal outlook faded.