Published date: 23 June 2025
GBPEUR
As suggested last week, the downside trajectory for GBP/EUR has remained, with a re-test of 1.16 looking increasingly likely in the near term. Sterling looks slightly vulnerable to an unwind of long positioning as tensions in the Middle East increase. Sterling can suffer sharp bouts of weakness during significant increases in cross-asset volatility, which is currently not being seen but cannot be fully discounted.
GBPUSD
The GBP/USD rally began to look fatigued last week, entering a consolidation phase within the broader uptrend. Both the BoE and FOMC meetings delivered outcomes in line with expectations, leaving wider market focus on rising geopolitical risks, with US action on Iran and the potential implications of a closure of the Strait of Hormuz — a thoroughfare for around 30% of sea-based oil transportation.
EURUSD
EUR/USD performed an orderly retracement within the uptrend channel last week. Hedge funds have become less heavily short on the dollar, prompting some dollar upside, supported by a slightly hawkish FOMC last Wednesday. Geopolitical developments remain a key focus across asset classes, though with limited FX impact so far. Manufacturing and services PMIs today for both the US and Europe are of note, as are US GDP, core PCE, and Powell’s testimony later this week.
