EUR/GBP Retreats from Highs Despite Weak UK Data

Economic

Summary:

Despite a dramatic UK retail sales miss, the Euro failed to sustain gains against the Pound as the BoE’s hawkish pause provided Sterling with support.

SELL EURGBP

Close Time

CLOSED

0.85300

Entry Price

0.84000

0.85700

0.87485 +0.00169 +0.19%

40.0

Pips

Loss

0.84000

0.85701

Exit Price

0.85300

Entry Price

0.85700

The Euro (EUR) edged lower against the British Pound (GBP) on Friday, retreating modestly despite a sharply disappointing set of UK retail sales figures. While on the surface this data might have favored further Euro upside, the Pound proved resilient — buoyed by the Bank of England’s recent policy stance and underlying strength in investor sentiment.

At the time of writing, the EUR/GBP pair is trading near 0.8530, down slightly from recent two-month highs, as investors digest the implications of the latest macroeconomic releases and central bank signals. This comes after a two-week rally that saw the pair grind higher amid broader Euro strength and a mixed outlook for UK economic data.

Data from the UK Office for National Statistics (ONS) showed that retail sales volumes plunged 2.7% in May — a stark miss compared to market expectations for a 0.5% decline. This marked the steepest monthly contraction since December 2023, with all major categories — food, clothing, and household goods — registering notable pullbacks. On a year-on-year basis, sales fell 1.3%, erasing the strong 5% growth recorded in April and casting a shadow over the health of consumer demand entering the summer.

Despite this gloomy print, the British Pound remained firm. Much of this resilience can be attributed to Thursday’s Bank of England decision, where policymakers opted to keep the benchmark interest rate steady at 5.25%. The decision, while expected, signaled a continued commitment to a cautious, data-dependent approach. Crucially, the tone struck by Governor Andrew Bailey and other officials was less dovish than markets had anticipated, dampening expectations for an imminent rate cut and helping to anchor Sterling.

On the other side of the channel, the Euro’s retreat appears linked to shifting expectations around European Central Bank (ECB) policy. Several ECB officials — including France’s François Villeroy de Galhau and Spain’s Luis de Guindos — have signaled a growing willingness to cut interest rates further this year, as inflation continues to trend lower across the Eurozone.

Headline inflation dropped below the ECB’s 2% target for the first time in months, while core inflation — a closely watched gauge — also eased. This has increased the likelihood of at least one additional rate cut before year-end, following the ECB’s initial trim earlier in June. However, the Euro’s strength relative to peers — particularly the US Dollar and British Pound — remains a complicating factor. A firmer Euro can dampen imported inflation, thereby slowing the pace of policy transmission and further economic cooling.

Technical Analysis

From a technical perspective, EUR/GBP may be showing signs of exhaustion after a recent bullish trend. The pair had been trading within a rising channel — a classic bearish reversal pattern — and has now broken below the channel's lower boundary, suggesting downside risk may be building.

Currently, the pair is encountering resistance near its recent highs, which also coincides with key Fibonacci levels. A bearish RSI divergence has formed, indicating that momentum is waning despite recent price highs. Moreover, the break below the previous higher low structure on the chart suggests that the bullish bias could be fading.

Traders may look to initiate short positions via a sell-limit order around the 0.382 Fibonacci retracement level, aligning with the confluence of technical resistance and the broader macro narrative that hints at Euro vulnerability in the near term.

TRADE RECOMMENDATION

SELL EURGBP

ENTRY PRICE: 0.8530

STOP LOSS: 0.8570

TAKE PROFIT: 0.8400

Risk Warnings and Disclaimers

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Alan

Commodity

Summary:

Recently, the Federal Reserve maintained interest rates but delivered hawkish signals. Simultaneously, the fade of safe-haven sentiment triggered a pullback in gold prices. However, geopolitical risks have not entirely dissipated; if conflicts escalate, gold prices are likely to rebound.

SELL XAUUSD

Close Time

CLOSED

3358.97

Entry Price

3295.00

3390.00

4213.55 +15.64 +0.37%

310.3

Pips

Loss

3295.00

3390.00

Exit Price

3358.97

Entry Price

3390.00

Fundamentals

As of the European session today, gold traded around 3350.00 per ounce, marking a decrease of 0.71% on the day. This week is poised to be the first week of declines for gold since early June.

Recent volatility in the gold market stems from a complex interplay of factors. The marginal easing of geopolitical risks has been a core factor suppressing gold prices. US President Trump made a statement about deciding within two weeks whether to join Israel in potential strikes against Iran. This reduced market fears regarding a blockade of the Strait of Hormuz or attacks on nuclear facilities, leading to the partial unwinding of gold's safe-haven premium. Concurrently, some safe-haven capital has rotated towards silver, further diverting buying interest away from gold. Nevertheless, geopolitical risks persist; should conflicts escalate within the next two weeks, gold could regain upward momentum.

Furthermore, conflicting signals from the Federal Reserve have heightened market uncertainty. While the Fed held rates steady, Chairman Powell warned that President Trump's tariff policies could exacerbate inflationary pressures, suggesting potential variability in the rate-cut path. Current market pricing implies a roughly 70% probability of a rate cut in September. However, if next week's US Core PCE inflation data exceeds expectations, the Fed might delay its easing cycle, which would diminish the appeal of gold as a non-yielding asset.

Technical Analysis

Fed "Hawkishness" and Fading Safe-Haven Sentiment Trigger Selling Spree _1

Regarding the daily chart, gold has breached the crucial support level at 3372.17. Should it fail to close the daily chart above this level, gold has a higher chance to plunge shortly, heading towards the support at 3292.74. Plunging further lower could bring gold to the low of May 29 (3245.33).

A death cross is formed to suggest a stronger bearish momentum. While the RSI remains above the midline, its steeper downward slope indicates weakening bullish momentum and a gradual shift towards bearish dominance.

Selling at highs is preferred.

Trading Recommendations

Trading direction: Sell

Entry price: 3360.00

Target price: 3295.00

Stop loss: 3390.00

Valid Until: July 04, 2025, 23:00:00

Support: 3392.74/3245.33

Resistance: 3372.17/3387.78

Risk Warnings and Disclaimers

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Warren Takunda

Commodity

Summary:

Crude prices climbed on Thursday as the Iran-Israel conflict escalated, raising fears of a wider regional war and potential supply disruptions.

BUY WTI

Close Time

CLOSED

75.000

Entry Price

80.000

70.000

59.222 -0.587 -0.98%

500.0

Pips

Loss

70.000

69.994

Exit Price

75.000

Entry Price

80.000

Oil markets surged higher on Thursday, driven by deepening geopolitical instability in the Middle East, as hostilities between Israel and Iran entered a perilous new phase. Brent crude rose 0.5% to $77.06 a barrel by 09:13 GMT, while U.S. West Texas Intermediate (WTI) July contracts gained 0.7% to $75.68. Prices remain firmly underpinned by fears that the situation could spiral into a regional conflict with global ramifications, especially as U.S. President Donald Trump weighs a decision that could shift the geopolitical landscape.

The rally builds on a dramatic surge earlier in the week, when Brent touched a five-month high of $78.50 after Israel launched a wave of airstrikes targeting military and strategic assets deep inside Iranian territory. The latest round of attacks marks the seventh consecutive day of direct confrontation between the two nations. On Wednesday night, Israeli forces reportedly targeted Iran’s sole nuclear energy facility, an act with far-reaching strategic and symbolic implications. Iran retaliated with a ballistic missile strike on a hospital in Tel Aviv, stoking further outrage and international alarm.

Amid the rising uncertainty, major Wall Street institutions have begun pricing in significant geopolitical risk. Goldman Sachs analysts noted that oil prices are currently carrying a $10-per-barrel geopolitical premium, reflecting both current supply disruptions and the looming threat of a broader shipping crisis in the Persian Gulf. Should regional shipping routes, particularly the Strait of Hormuz, become compromised, Goldman warns Brent could spike well past $90—and potentially hit $120 under more extreme scenarios.

The Strait of Hormuz, through which roughly one-fifth of the world’s oil passes daily, has emerged as a critical flashpoint. Any closure or significant disruption in this key maritime chokepoint would trigger a profound energy shock, reminiscent of previous Middle East crises. “If Hormuz is closed even temporarily, we could see prices gap up violently,” one senior energy analyst noted. “The supply implications would be immediate and severe.”

Iran’s position as OPEC’s third-largest producer, pumping around 3.3 million barrels per day, underscores the scale of the risk. A significant hit to Iranian output—whether through conflict, sanctions, or logistical disruption—would reverberate through global energy markets, compounding existing concerns about tight supplies and underinvestment in upstream capacity.

U.S. President Donald Trump, speaking at a press briefing late Wednesday, said he had not yet decided whether Washington would join Israel in its confrontation with Iran. His indecision has only amplified market anxiety, as traders brace for either an American entry into the conflict—which would escalate the stakes dramatically—or a diplomatic maneuver that might defuse tensions.

"Markets are trapped in a binary outlook,” said Helima Croft, global head of commodity strategy at RBC Capital Markets. “If Trump opts for military involvement, we’re in a completely different price regime. If he backs off, we might see a short-term correction—but the damage to risk sentiment has already been done.”

The broader fear is that a U.S.-Iran confrontation could deliver a terminal blow to already fragile regional stability. Analysts warn that direct strikes on Iranian energy infrastructure would not only provoke a sharp military response, but also risk destabilizing key oil-producing neighbors like Iraq, the UAE, and even Saudi Arabia.

Adding further fuel to the rally was a surprisingly large drawdown in U.S. crude inventories. The Energy Information Administration (EIA) reported that U.S. commercial crude stocks fell by 11.5 million barrels in the week ending last Friday, far surpassing analyst expectations of a modest 1.6 million-barrel decline. The draw brought total inventories to 420.9 million barrels, underscoring continued strong demand and possibly early signs of tightening supply dynamics.

Gasoline inventories also dipped slightly by 0.2 million barrels to 230 million barrels, while distillate stocks rose 0.5 million barrels to 109.4 million. The data reinforced the notion that despite macroeconomic uncertainty, U.S. refiners are drawing down crude aggressively—perhaps in anticipation of further price gains or supply constraints stemming from global tensions.

Technical Analysis

From a technical perspective, crude oil prices are maintaining bullish momentum. WTI is consolidating just above the key psychological level of $75, with the Relative Strength Index (RSI) having recently exited overbought territory—an encouraging sign for bulls. The price action suggests a potential assault on the next resistance zone, and analysts are closely watching for a breakout that could confirm a broader trend reversal to the upside.

The recent rally looks technically sound,the overbought conditions have been unwound, and momentum indicators are starting to turn up again. If WTI can decisively close above $75, the path toward $78 and even $80 opens up.

TRADE RECOMMENDATION

BUY WTI

ENTRY PRICE: 75.00

STOP LOSS: 70.00

TAKE PROFIT: 80.00

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The Pound Sterling struggled on Thursday as the Bank of England held interest rates steady at 4.25%, splitting the Monetary Policy Committee on the decision.

SELL GBPUSD

Close Time

CLOSED

1.34300

Entry Price

1.31000

1.36000

1.33194 -0.00118 -0.09%

170.0

Pips

Loss

1.31000

1.36000

Exit Price

1.34300

Entry Price

1.36000

The Pound Sterling (GBP) came under significant selling pressure on Thursday following the Bank of England’s (BoE) decision to keep interest rates unchanged at 4.25%, a move largely anticipated by financial markets but marked by a notable dissent within the Monetary Policy Committee (MPC). This pause in monetary tightening, signaling a "gradual and careful" approach to policy evolution, came just weeks after the central bank’s modest 25 basis point rate cut in May, as it balances the competing pressures of persistent inflation and fragile economic growth.

Investors had broadly expected the BoE to maintain rates at this level, with seven out of nine MPC members voting to hold. However, the dissent from three members—Swati Dhingra, Dave Ramsden, and Alan Taylor—highlights ongoing uncertainty within the committee. These dissenters cited signs of a loosening labour market, subdued consumer demand, and wage settlements aligning more closely with sustainable levels as justification for further monetary easing. This division signals a nuanced debate at the heart of UK monetary policy, with some members advocating a quicker return to looser financial conditions to support growth.

The BoE projects inflation to peak at 3.7% in September before gradually easing to just below 3.5% for the remainder of the year. This forecast marks a significant slowdown from the double-digit inflation peaks seen in 2022 but remains above the 2% target, complicating policy decisions. The central bank’s cautious stance reflects ongoing concerns over inflationary pressures stemming from volatile energy prices—exacerbated by geopolitical tensions in the Middle East—and the potential for renewed inflation shocks.

Market participants are closely watching upcoming UK economic data for guidance on the BoE’s future moves. Recent labour market figures revealed some cracks beneath the surface strength. While the UK job market remains historically tight, growth in employment and wages has moderated, partly due to increased employer contributions to social security schemes. Wage growth, a key driver of domestic inflation, has slowed, helping to ease cost pressures in the services sector. Service sector inflation, which is closely monitored by the BoE given its significant weight in the consumer basket, cooled to 4.7% in the latest reading from 5.4%, signaling a moderation in consumer price pressures.

Investors will be looking ahead to the release of May’s Consumer Price Index (CPI) and further labour market data to assess whether the inflation slowdown is sustainable and how much longer the BoE will maintain its cautious, data-dependent approach.

Adding complexity to the BoE’s inflation outlook are the ongoing geopolitical tensions in the Middle East, which risk driving up energy prices once again. Renewed energy shocks could derail the tentative inflation progress, forcing the BoE to reconsider its moderate easing bias. This external risk has created an environment of uncertainty for investors and traders, weighing on GBP sentiment in the near term.

Technical Analysis

From a technical perspective, the GBP/USD currency pair extended its decline in intraday trading on Thursday, reflecting the broader bearish sentiment. The pair’s recent fall off oversold conditions, as indicated by the Relative Strength Index (RSI), has triggered the appearance of fresh negative signals, suggesting further downside potential.

Crucially, GBP/USD has broken below a key support level at 1.3410 and breached a major short-term bullish trend line, undermining earlier hopes of a technical rebound. The pair’s sustained trading below its 50-day Exponential Moving Average (EMA50) reinforces the bearish scenario, suggesting that sellers remain firmly in control for now.

If the pound fails to regain ground quickly, traders will likely target lower support zones, while the BoE’s forthcoming monetary guidance and UK economic data will play a pivotal role in shaping medium-term GBP/USD direction.

TRADE RECOMMENDATION

SELL GBPUSD

ENTRY PRICE: 1.3430

STOP LOSS: 1.3600

TAKE PROFIT: 1.3100

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Traders' Opinions

Summary:

The Australian Dollar fell sharply on Thursday, undermined by escalating Middle East tensions, soft domestic labor data, and a hawkish message from the Federal Reserve.

SELL AUDUSD

Close Time

CLOSED

0.64590

Entry Price

0.63800

0.65500

0.66353 -0.00030 -0.05%

79.0

Pips

Profit

0.63800

0.63799

Exit Price

0.64590

Entry Price

0.65500

The Australian Dollar (AUD) extended its recent downtrend on Thursday, marking one of the worst performances among G10 currencies, as geopolitical tensions in the Middle East and weak Australian employment figures prompted investors to dump risk-sensitive assets in favor of safe-haven alternatives like the US Dollar.

The AUD/USD pair fell 0.6%, reversing Wednesday’s modest gains, and is now hovering near the lower boundary of a multi-week range around 0.6445–0.6455—a crucial technical zone that had previously acted as a floor during bearish attempts on June 3rd and June 13th.

Investors globally have turned increasingly risk-averse after reports emerged that the Israel-Iran conflict could expand beyond regional boundaries. Tensions ratcheted higher following comments from US President Donald Trump, whose vague remarks regarding possible US military intervention left markets on edge. Risk sentiment deteriorated further after reports surfaced that senior American officials were preparing strategic contingencies for a potential strike against Iran.

These developments have triggered a sharp rotation out of risk-linked currencies like the Aussie, especially considering its strong correlation with global growth sentiment and commodity demand.

The sell-off in the Australian Dollar was exacerbated by lackluster domestic data. The Australian Bureau of Statistics (ABS) reported that net employment fell by 2,500 jobs in May, a figure well below expectations. While the unemployment rate remained unchanged at 4.1%, analysts have warned that stagnating job growth could point to broader weaknesses in the Australian economy.

The jobs data, while not disastrous, suggests we’re hitting a plateau in labor market momentum. With global sentiment already on the defensive, these numbers give the Reserve Bank of Australia more room to stay on the sidelines, possibly even consider easing if external shocks worsen.

Adding to the pressure on the Australian Dollar was Wednesday’s Federal Reserve policy announcement, which, while leaving the benchmark rate unchanged, offered little comfort to markets hoping for a dovish pivot. The central bank’s closely-watched Dot Plot still suggests two potential rate cuts before the end of the year. However, Chair Jerome Powell's press conference struck a more hawkish tone, with the Fed Chair warning that inflation risks remain elevated—particularly as tariffs and supply-side frictions linger.

The contrast between the Fed’s cautious stance and Australia’s weakening economic indicators has widened the monetary policy divergence, boosting demand for the US Dollar (USD) at the expense of the AUD.

Technical Analysis

From a technical standpoint, AUD/USD appears to be on shaky ground. After failing to overcome resistance at 0.6535, the pair was rejected and has since broken below its 50-period Exponential Moving Average (EMA50) on the 4-hour chart. The Relative Strength Index (RSI) is also flashing warning signs, pulling back from overbought territory and indicating growing downside momentum.

Currently trading near 0.6460, the pair is testing a significant horizontal structure that, if breached, could open the door to deeper losses toward the 0.6380–0.6400 zone. Despite the short-term bearish momentum, analysts note that the broader trend still has a mild bullish inclination—though further downside could invalidate that bias.

TRADE RECOMMENDATION

SELL AUDUSD

ENTRY PRICE: 0.6459

STOP LOSS: 0.6550

TAKE PROFIT: 0.6380

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

Despite the recent consolidation, the inability of the RSI to break lower suggests a lack of strong bearish momentum.

BUY EURCAD

Close Time

CLOSED

1.57093

Entry Price

1.57800

1.56700

1.61033 +0.00170 +0.11%

16.9

Pips

Profit

1.56700

1.57262

Exit Price

1.57093

Entry Price

1.57800

European Central Bank (ECB) Governing Council member Mario Centeno voiced serious concerns on Wednesday regarding the euro area’s growth outlook, stating that inflation cannot sustainably return to 2% without a stronger economy. “We need a more robust economy to be compatible with 2% inflation—this is my main position,” Centeno said, as reported by Reuters.

Fresh data from the eurozone continues to reinforce the narrative of cooling inflation, with pockets of resilience observed in the labor market and the services sector. Headline inflation fell below the ECB’s 2% target in May, offering policymakers more room to lower borrowing costs following the recent 25 basis point rate cut.

The Harmonised Index of Consumer Prices (HICP) for the eurozone was confirmed at 1.9% year-over-year in May 2025, marking the first time inflation has dipped below the ECB’s target since September 2024. This suggests that price pressures are gradually easing across the bloc. Meanwhile, core inflation—which strips out volatile components such as energy, food, alcohol, and tobacco—moderated to 2.3%, continuing its downward trajectory.

As inflation shows signs of sustained decline, markets increasingly expect the ECB to hold interest rates steady at its upcoming July meeting. Several policymakers have voiced a preference for caution, advocating a “wait-and-see” approach given lingering economic risks. Governing Council member Robert Holzmann remarked that the ECB should refrain from additional cuts at least until September, while Executive Board member Isabel Schnabel warned that “new shocks” could still arise despite the ongoing disinflation trend. Both emphasized the need for a data-driven and prudent monetary policy stance in the coming months.

In North America, Canadian Prime Minister Mark Carney announced on Monday that he had reached an understanding with former U.S. President Donald Trump to pursue a resolution on trade tariffs within 30 days.

Meanwhile, extended gains in crude oil prices may lend further support to the Canadian dollar (CAD), which is heavily influenced by commodity trends. As Canada remains the largest crude oil exporter to the United States, rising oil prices typically provide a bullish tailwind for the Loonie. Upside Momentum May Resume if Support Zone Holds on EURCAD_1

Upside Momentum May Resume if Support Zone Holds on EURCAD_1

Technical Analysis

From a technical standpoint, EUR/CAD is currently testing a significant support zone near the 1.5712 level, which aligns closely with the 100-period moving average at 1.5702. Just below, the 200-period moving average at 1.5600 further strengthens the area as a potential launchpad for bullish momentum. Historically, this region has served as a key pivot, and a strong upside reaction here could drive the pair toward the next resistance level at 1.5781.

Additionally, the RSI has remained above the 46 mark, reflecting a neutral-to-bullish tone. Despite the recent consolidation, the inability of the RSI to break lower suggests a lack of strong bearish momentum. As long as the price holds above both the 100 and 200-period moving averages, the upward bias remains intact. This reinforces the idea that buyers may regain control in this zone, increasing the likelihood of a continuation to the upside.

Trading Recommendations

Trading direction: Buy

Entry price: 1.5710

Target price: 1.5780

Stop loss: 1.5670

Validity: Jun 27, 2025 15:00:00

Risk Warnings and Disclaimers

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Eva Chen

Economic

Forex

Summary:

The GBPUSD remained under pressure on Wednesday, trading below 1.3500. With UK inflation meeting its target and potential disruptions to central bank plans stemming from the Middle East conflict, the asset may experience further declines.

BUY GBPUSD

EXP

EXPIRED

1.33500

Entry Price

1.38130

1.31900

1.33194 -0.00118 -0.09%

Pips

EXPIRED

1.31900

1.36499

Exit Price

1.33500

Entry Price

1.38130

Fundamentals

The British pound underperformed against other currencies on Tuesday, influenced by the escalating conflict between Israel and Iran. The intensification of geopolitical tensions in the Middle East dampened investor risk appetite, bolstering the U.S. dollar's resilience against other currencies and subsequently pressuring the pound.

According to the Office for National Statistics, the May Consumer Price Index (CPI) rose by 3.4% year-over-year, aligning with the Bank of England's projections. The closely watched services inflation rate decreased from 5.4% to 4.7%, also meeting the central bank's expectations. This figure is considered a key indicator of domestic price pressures.

Despite the overall trend indicating a gradual decline in inflation, market participants may be focusing on the renewed acceleration in goods prices, which increased by 2.0% year-over-year, reaching the highest level since November 2023.

The data reveals that while airfare and fuel costs have decreased, these declines have been offset by increases in food prices, including items like chocolate and meat, as well as furniture and household goods such as refrigerators and vacuum cleaners.

Following the release of this data, the British pound experienced volatile trading. As of Tuesday, market expectations were largely pricing in two additional 25-basis-point rate cuts by the Bank of England this year. Furthermore, the conflict between Israel and Iran could complicate the Bank of England's future policy decisions, given that oil prices have risen approximately 14% over the past week. Although investors and economists consider a rate cut by the central bank on Thursday highly improbable, the August meeting may still allow for further action.

Bulls Encountered Resistance, and Both Fundamental and Technical Indicators Are Showing Signs of Weakness_1

Technical Analysis

The GBPUSD experienced a significant decline on Tuesday, validating the strength of a short-term top. The asset previously breached 1.3600, reaching a multi-year high, but despite the recent pullback, the prevailing trend remains bullish.

The 4-hour MACD for the GBPUSD currently exhibits bearish divergence. While there has been a slight intraday rebound, a resumption of the downward movement is anticipated in the short term, with a retracement to the 55-day SMA (currently at 1.3328). A test of this support level could potentially trigger a bounce. A break above 1.3631 would reactivate the rally from 1.2099, with the potential to surpass the 100% Fibonacci projection level from 1.2099, targeting 1.3813.

Conversely, a sustained break below the 55-day SMA would signal a deeper correction in progress.