Published date: 28 April 2025

GBPEUR

Much of the recent decline in GBP/EUR was driven by sharp ‘risk-off’ moves, to which sterling is more sensitive than the euro. Calmer equity markets have allowed sterling to bounce against the euro. At the same time, the euro has been unable to make further gains as the immediate scheduled data releases are a little more sparse. Eurozone inflation on Friday is of note at a time when the ECB is likely to refrain from cutting rates to accommodative levels.

GBPUSD

GBP/USD retraced slightly last week following impressive gains to 1.3423, fueled by continued dollar selling. Last week was punctuated by UK growth forecast downgrades, with the IMF reducing its 2025 forecast by 0.5%. Month-end flows and a brief dollar bounce may extend into the start of this week, with the focus still on US/China headlines. Scheduled UK data is light this week, leaving the dollar in the driving seat with GDP, core PCE (inflation), and Friday’s Non-Farm payrolls all inbound.

EURUSD

EUR/USD retraced slightly last week having tested technical trendline resistance, alongside a modest bounce in the dollar, which occurred in tandem with a bounce in US equities (with which correlation remains strong). German and eurozone inflation data are inbound for the euro this week, while the US remains the driver for price action on overall macro riskon/risk-off dynamics, alongside a string of domestic releases including GDP and Friday’s Non-Farm Payrolls.