Euro Outlook Brightens, Pound Rebound Rally Faces Tests

A fresh survey of over 30 major investment banks has turned more positive on the Euro.
 
The latest consensus now sees the single currency holding a stronger profile against the Dollar through to mid-2025, a clear step up from just three months ago.

This upgrade isn’t about runaway Euro strength, but it does reflect a change in tone: the Dollar’s earlier momentum has faded, and expectations for multi-month highs in EUR/USD have crept back in.

Behind the shift are signs of resilience in the Eurozone economy, a softer U.S. interest rate outlook, and fewer risks weighing on the Euro.

The Pound has been climbing steadily against the Dollar, helped by a Bank of England decision last week that signalled a pause in further rate cuts for now.
This gave Sterling fresh support, with GBP/USD now on its seventh straight day of gains and pushing towards the 1.35 mark.

The real test comes later today with the latest U.S. inflation numbers. A hotter-than-expected reading could give the Dollar a boost and slow Sterling’s climb. A softer number might have the opposite effect, potentially opening the door for GBP/USD to push towards 1.36.

Sterling has also been gaining ground on the Euro, helped by last week’s BoE decision and a slightly better tone in UK economic data.
The pair starts the week in the middle of its recent trading range, with the potential to edge higher towards late-June levels if momentum holds.

The UK jobs update will be the first big test, with unemployment steady but signs of the labour market softening still in view.
On the Euro side, inflation data from Germany and Spain later this week could shape expectations for the ECB’s next move. If price pressures come in softer, the Euro could face a short-term dip.