Strategic FX Briefing: Euro, Pound and Dollar in Focus Ahead of Key ECB and UK Data

The European Central Bank meeting takes place this week, alongside key UK economic data releases - most notably Retail Sales and Labour Market figures. These events are expected to shape short-term direction for EUR/USD, GBP/USD, and GBP/EUR.

EUR/USD: Stalled Uptrend Ahead of ECB Decision

The euro-dollar pair is currently trading around 1.1660, holding within a short-term range of 1.1580 to 1.1700.

While the ECB’s aggressive rate-cutting cycle appears largely complete, markets still price in the possibility of one final 25bps cut in September. Risks tied to U.S.& EU trade tensions and a strengthening euro could prompt the ECB to adopt a more dovish tone than previously expected. This uncertainty is capping upside momentum for EUR/USD.

GBP/USD: Cautious Recovery Ahead of UK Retail Sales and Jobs Data

Sterling trades near 1.3400, recovering slightly from recent lows.

Expectations for further Bank of England (BoE) rate cuts have been pared back following strong wage growth and elevated inflation. If this week’s UK Retail Sales and Labour Market figures beat expectations, GBP/USD could extend its recovery. However, upside is likely to be limited ahead of the BoE’s August policy meeting.

GBP/EUR: Support at 1.1500

The pair continues to test support near 1.1500, a key psychological and technical level.

While markets still expect an August BoE rate cut, the outlook for additional cuts is less clear given persistent inflation pressures. With the ECB potentially near the end of its own easing cycle, this divergence may drive short-term volatility in GBP/EUR. A break below 1.1500 would signal renewed downside, but current indicators point to consolidation rather than collapse.