Trump–Putin Summit: A Weekend of Uncertainty

The much-anticipated summit between Donald Trump and Vladimir Putin wrapped up over the weekend, but delivered little in the way of concrete outcomes. Despite weeks of speculation, no ceasefire emerged. Instead, the meeting concluded with only a vague “understanding” between the two leaders, as Putin reiterated his uncompromising stance that Ukraine must cede territory – particularly in the contested Donbas region.

Reports indicate Trump may attempt to pressure President Volodymyr Zelenskiy into accepting such concessions, effectively shifting responsibility for peace onto Kyiv. In a subsequent interview with Fox News, Trump remarked that it was up to Zelenskiy to “get it done.” European allies, wary of a purely US–Russia dynamic, continue to push for a trilateral summit to ensure Ukraine retains a voice in negotiations.

The lack of a truce is widely viewed as a tactical advantage for Putin, who maintains battlefield momentum while peace discussions tilt towards Ukrainian compromises rather than a genuine halt in hostilities.

Dollar Balances Geopolitics and Federal Reserve Signals

Currency markets reacted cautiously to the summit. The US dollar slipped by around 0.3% on Friday, despite upbeat retail sales figures and positive revisions to earlier data. Traders appeared reluctant to extend dollar gains amid soft labour market conditions and lingering uncertainty over monetary policy.

Looking ahead, geopolitical risk still lends support to the dollar through two channels: its role as a safe-haven asset and higher demand driven by firmer oil prices. However, the decisive factor this week will be central bank communication. The release of the Federal Reserve’s minutes, followed by the Jackson Hole Symposium, will provide the Fed’s first major commentary since talk of a potential dovish shift began. Should this outlook be confirmed, the dollar could come under renewed selling pressure.

Euro Awaits a Peace Dividend

The euro continues to trade close to $1.17, supported by stable market sentiment despite the inconclusive outcome of the Trump–Putin talks. European equity futures opened marginally higher, oil prices remain subdued, and risk appetite is broadly steady.

A genuine breakthrough in Ukraine peace negotiations would likely strengthen the euro, easing geopolitical risk, calming energy markets, and improving the Euro Area’s growth prospects. Lower volatility in inflation and firmer sentiment could also reinforce expectations that the European Central Bank will keep policy unchanged, boosting the appeal of euro-denominated assets.

This week brings a packed Eurozone data calendar: final July inflation figures, preliminary August PMIs, consumer confidence readings, and Germany’s Q2 GDP expenditure breakdown. Eurozone wage growth figures will be particularly important for the ECB’s inflation assessment. ECB President Christine Lagarde is also scheduled to speak in Geneva and at Jackson Hole, though any explicit policy guidance before the 11 September meeting is unlikely.

Sterling Steady with Focus on Inflation

Sterling ended last week nearly 1% stronger, buoyed by market expectations that the Bank of England could adopt a more hawkish stance in light of resilient GDP and labour market performance.

This week’s UK inflation report will be pivotal. With wage growth still hovering around 5% and service-sector inflation proving sticky, the risk of another upside surprise is considerable. Should inflation exceed forecasts, GBP/USD could break decisively above the $1.36 level tested last week. Current market pricing indicates just under a 60% probability of one further rate cut before year-end.

Against the euro, sterling looks set to consolidate near €1.16, with potential for gains if inflation remains elevated. The euro, meanwhile, continues to be weighed down by higher oil prices and the absence of meaningful progress in Ukraine peace talks.

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