EUR/USD and GBP/USD Consolidate After Pullback From Yearly Highs

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The euro and the pound have retreated after setting new yearly highs and are now trading near key levels, reflecting a wait-and-see stance as markets look ahead to major events in the coming sessions. Following a strong upward move over recent weeks, traders opted to lock in part of their profits, triggering a corrective pullback and a shift into consolidation. Additional caution is being driven by today’s Bank of England meeting, the outcome of which could influence sterling and set the tone for European currencies ahead of more important US data releases.

Overall, EUR/USD and GBP/USD appear to be in a state of balance after a sharp rally. Today’s Bank of England decision and tomorrow’s US labour market reports are seen as key reference points for assessing the next directional move. A more measured stance from policymakers and weak or neutral employment data could support a resumption of the upward trend, while a more hawkish tone or strong US figures may increase pressure on the pairs and lead to a deeper correction from recent highs.

EUR/USD

After rebounding from 1.2080, EUR/USD has remained within a narrow range, showing no clear readiness either to resume strong gains or to extend the correction. The market is assessing whether the recent cooling in the US labour market — which previously underpinned expectations of Fed policy easing — will persist. Upcoming employment data are viewed as a decisive factor: they could either confirm conditions for further upside or weigh on the euro if signs of US economic resilience emerge.

Technical analysis of EUR/USD points to potential strengthening towards 1.1900–1.1920, as a bullish harami pattern has formed on the daily chart. Should the pair settle below 1.1760, a continuation of the decline towards 1.1720–1.1670 becomes possible.

Key events for EUR/USD:

  • Today at 09:00 (GMT+2): German factory orders
  • Today at 15:30 (GMT+2): US initial jobless claims
  • Today at 17:00 (GMT+2): US JOLTS job openings

GBP/USD

GBP/USD has also entered a consolidation phase after pulling back from its yearly highs. The pair is currently trading within a range that capped gains for much of last year. If buyers manage to keep GBP/USD above 1.3600 in the coming sessions, a renewed test of the 1.3800–1.3850 area is possible. A move below 1.3600 would open the door to a deeper correction towards 1.3470–1.3520.

Key events for GBP/USD:

  • Today at 14:00 (GMT+2): Bank of England interest rate decision
  • Today at 14:30 (GMT+2): Speech by Bank of England Governor Bailey
  • Tomorrow at 15:30 (GMT+2): US unemployment rate