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The big story this week, has once again been the strength of the American Dollar, in fact on a trade weighted basis, the Big Dollar touched it’s highest value in almost a year. The catalyst for this week’s activity was the minutes of the July US Federal Reserve (Fed) monetary policy meeting, which were published this week.

Contained inside the minutes was a note that “recent improvement in labor market conditions and the cumulative progress over the past year had been greater than anticipated,” suggesting that interest rate hikes may occur sooner than expected. This triggered a fresh round of USD buying.

The interest in the Greenback, helped guide GBPUSD lower for the 7th consecutive week, the pair briefly touching its lowest level since April 2014 in the 1.65 handle. Domestic factors too weighed on the British unit this week. In particular the July Consumer Price Index (CPI) result, which showed that the rate of inflation slowed to an annualised +1.6%, down three ticks from June’s reading of +1.9%. The BoE maintains a +2.0% inflation target, which means that this week’s number affords the BoE some additional latitude to leave interest rates unchanged. Off of charts, the pair is looking oversold from a technical perspective and with the quiet data week ahead we could see a period of consolidation in the near term.

The Bank of England’s (BoE) policy meeting minutes were also released this week and came with their own hawkish surprise. The minutes revealed two of the nine members of the BOE’s monetary policy committee broke rank and voted to hike rates last month. This has revived rate speculation in the UK, however it was not enough to overcome the strength of the USD combined with the poor UK CPI result.

The Common currency was also on its back foot this week, EURUSD conceding it worst value since late 2013. The declines, due largely to Greenback interest, have pushed the pair down into the low 1.3 area, stimulating talk of 1.3000. General weak sentiment in the common currency also saw it fail to extend last week’s gains against Sterling, GBPEUR hovering near the 1.25 area this week. This pair looks to be forming a descending trend, however economic fundamentals remain supporting of the Pound, suggesting that the current pullback may be temporary.

The week ahead looks quiet in comparison to the last couple of weeks, especially in the UK. Monday starts out with a bank holiday in Britain and the rest of the week doesn’t have any top tier Sterling specific economic data slated for release. As such The British Pound will be taking its queue from broader themes.

The Eurozone on the other hand sees the crucial August CPI estimate next Friday. This favored inflation measure has been a headline grabber over the last few months. Despite fresh monetary policy accommodation announced by the European Central Bank (ECB) in June, it has been consistency underperforming. In fact CPI has become the symbol of the economic woes of the Eurozone economy. The ECB, like the BoE, maintains a +2.0% inflation target and last month CPI printed its lowest result since November of 2010 at +0.4%. Expectations are that data next Friday will show that CPI declined a notch further to fresh multi-year lows of +0.3%; indicating that current simulative policies are failing to effectively combat economic headwinds. Any kind of miss next week could put additional pressure on an already flagging Euro as it would elevate the possibility of further policy accommodation from the ECB.

There are also a couple pieces of important German economic data next week including Business Climate survey results on Monday and local CPI on Thursday. The surprise German Q2 2014 GDP contraction announced the other week has exposed cracks in the economic foundations of the Eurozone. As such financial markets are particularly sensitive to German figures right now. Accordingly a disappointing result next week could see a disproportionate reaction in the Euro.

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