GBP/USD, EUR/USD & GBP/EUR Forecast: War, Oil Prices and USD Outlook

FX Market Insight: Geopolitics, Oil and Shifting Expectations 

The FX market is currently being driven by geopolitics, oil prices, and shifting central bank expectations. In this GBP/USD, EUR/USD and GBP/EUR forecast, we break down what is moving currencies and where the key risks sit for businesses managing international payments. 

Markets are moving quickly this week, but not cleanly. 

Initial relief on ceasefire headlines pushed sterling higher and the dollar lower. Within hours, that narrative began to unwind. Oil found a floor, tensions remain unresolved, and the dollar is quietly regaining strength. 

This is not a stable environment. It is a shifting one.  

The Lamera Framework: How We Analyse the FX Market 

Every day, we strip the noise back and ask four simple questions: 

Because in FX, outcomes are rarely driven by what is happening.

They are driven by the gap between expectation and reality.

GBP/USD Forecast: Sterling Meets Resistance as USD Strength Builds
In this GBP/USD forecast, sterling rallied strongly earlier in the week, briefly pushing towards 1.3480 as markets reacted positively to ceasefire headlines between the U.S. and Iran.
The expectation was clear:
 

But that expectation has not held.
 
The ceasefire remains fragile.
The Strait of Hormuz is still effectively closed.
Oil has found a floor and is beginning to recover.
 
This matters.
Higher oil supports inflation expectations, delays central bank easing, and strengthens the US dollar.
We are already seeing that shift.
Sterling has struggled to break higher, with 1.3480 acting as a ceiling, reinforced by technical resistance around the 100-day moving average.
 
Lamera View
The market is still pricing a softer USD environment.
If that shifts, even slightly, GBP/USD can move lower quickly.
A retracement towards the 1.3250 region becomes increasingly likely if oil continues to firm and geopolitical risk remains elevated.
For businesses with USD exposure, this is a clear risk window.

GBP/EUR Forecast: Sterling Strength Fades as Volatility Returns
The GBP/EUR exchange rate followed a similar pattern.
Sterling initially strengthened, pushing above 1.15 as markets moved into a risk-on environment following ceasefire optimism.
But the move lacked follow-through.
As oil stabilised and geopolitical tensions resurfaced:
 

There is an additional dynamic at play.
UK bond yields are falling, which typically acts as a headwind for sterling. At the same time, energy uncertainty and shifting rate expectations are weighing on the currency.
 
Lamera View
Sterling strength in this GBP/EUR outlook appears limited.
Without a sustained improvement in global risk sentiment or domestic fundamentals, GBP/EUR is likely to remain range-bound and reactive to headlines.

EUR/USD Outlook: Strength Driven by Optimism, Not Certainty
In this EUR/USD outlook, the euro has pushed higher, breaking above 1.1650 as markets continue to lean towards a more constructive global narrative.
There remains a belief that tensions will eventually de-escalate.
That belief is currently supporting the euro.
 
However, underlying risks remain:
 

Some institutions are already positioning for short-term USD strength, despite longer-term bearish views on the dollar.
 
Lamera View
EUR/USD strength is being driven by optimism rather than confirmed improvement.
If geopolitical risks escalate or growth concerns deepen in Europe, the euro’s gains could unwind quickly.

What This FX Market Outlook Means for Businesses
Most businesses focus on exchange rates.
But the reality is different.
Most businesses lose money on timing, not rates.
This week is a clear example:
 

At Lamera, we take a different approach.
 

The Key Risk in the FX Market Right Now
The market is still leaning towards:
 

But the reality is less stable.
If inflation risks return via energy prices:
 

This shift does not require a major event.
It simply requires the current narrative to be questioned.
 
Final Thought: This Is a Market That Requires Active Management
This is not a market to drift through.
It is a market to manage actively.
Because the biggest moves are not coming from what is known.
They are coming from what changes.
And right now, that change is happening in real time.

FX Market FAQ

What is driving GBP/USD right now?
GBP/USD is being driven by geopolitical tensions, oil prices, and shifting expectations around US interest rates. Rising oil prices support the dollar by increasing inflation risks.

Why do oil prices impact currency markets?
Higher oil prices can increase inflation, which may delay interest rate cuts from central banks. This often strengthens currencies like the US dollar.

What is the outlook for EUR/USD?
The EUR/USD outlook remains supported by optimism around de-escalation, but risks remain. If tensions continue or Eurozone growth weakens, the euro may come under pressure.

Should businesses manage FX risk now?
In volatile markets, managing timing is critical. Businesses should consider securing part of their currency exposure during periods of uncertainty.

Work With Lamera
If you have upcoming GBP, EUR or USD exposure, we can help you structure your timing and reduce risk.
Get in touch to discuss your position.