Now I have all the macro context I need. Let me write the post.

The Week in the Dollar

The dollar posted its best week in over a month, with DXY climbing 0.71% to 101.5, as a double shot of risk aversion and surging energy prices pulled capital toward the greenback and the Swiss franc.

The week’s standout moves were sterling’s 1.19% slide against the dollar and USD/CHF’s 1.15% rally — both driven by the same macro cocktail. Brent crude ripped 11.67% higher on renewed Gulf shipping disruptions, while WTI gained 9.67%, repricing inflation expectations across G10 and punishing currencies tied to energy-importing economies. Gold added 1.07% to $4,056, reinforcing the defensive tone. Copper’s 1.92% gain offered a minor tailwind for AUD, but the Aussie still slipped 0.23% as broad dollar strength dominated.

EUR/USD drifted lower by 0.61% to 1.1375 after the ECB held rates at 2.25% on Thursday — no surprise, but the statement flagged energy uncertainty, which kept the euro on the back foot. USD/JPY ground 0.87% higher to 163.79, extending the yen’s structural weakness even as risk sentiment soured.

Key Pair Breakdown

GBP/USD — 1.3319, down 1.19%. The week’s biggest G10 loser. Friday’s UK data was uniformly strong — manufacturing PMI jumped to 52.8, services PMI snapped back to 51.8, and retail sales beat with a 1.0% monthly gain — but none of it mattered. Sterling was crushed by a toxic combination of surging gilt yields (10-year hit 5.08%), fiscal anxiety around new policy spending, and broad risk-off flows tied to the oil shock. The pound’s failure to hold 1.3400 mid-week opened the door to the 1.3300 handle, and it closed right on it. EUR/GBP’s 0.41% gain to 0.8533 confirms this was a sterling story, not just dollar strength.

USD/CHF — 0.8177, up 1.15%. The franc’s safe-haven bid was oddly muted this week — CHF weakened against the dollar despite gold rallying and risk appetite fading. The likely explanation: oil. Switzerland is a net energy importer, and Brent’s 12% spike acts as a terms-of-trade headwind for CHF in the same way it does for JPY. EUR/CHF’s 0.47% gain to 0.9297 tells the same story — the franc underperformed everything except sterling and the kiwi.

Week Ahead Setup

Next week is loaded. The Fed decides Wednesday — futures price an 89% chance of a hold at 3.50-3.75%, but the statement language on inflation will matter after this week’s oil shock. The Bank of England follows on Thursday, widely expected to hold at 3.75%, though strong data and rising gilt yields complicate the forward guidance.

For GBP/USD, 1.3300 is the line. A clean break lower targets 1.3200 and reframes the pound’s entire Q3 trajectory. If BoE guidance leans hawkish on the back of hot PMIs, a relief bounce toward 1.3400 is in play. USD/JPY at 163.79 is approaching intervention-watch territory — any hint from Japanese officials resets the pair fast. Oil is the wild card: Brent near $100 keeps energy-linked inflation risk alive and favours NOK (the week’s strongest G10 cross vs EUR, down just 0.72% on USD) over energy importers.

Bottom Line

The dollar reclaimed the driver’s seat as oil-driven inflation fears and risk aversion trumped soft-landing optimism — and next week’s Fed-BoE double header will test whether that bid holds. GBP/USD at 1.3300 is the pair to watch: strong data couldn’t save sterling this week, and if fiscal concerns deepen, the next leg lower is already being priced.

Read next: FX Markets · How to Read the COT Report · What Is a Bond?