European Currencies Decline: Pound Hits New Lows, Euro Under Pressure

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European currencies continue to weaken against the US dollar amid rising geopolitical tensions and increased demand for safe-haven and liquid assets. Market participants are reducing exposure to riskier instruments, putting pressure on both the euro and the pound. Additional support for the dollar comes from expectations surrounding upcoming US macroeconomic data, which may confirm economic resilience and reinforce the Federal Reserve’s hawkish stance.

Escalating tensions in the Middle East remain a key driver for the FX market. Intensifying conflict, risks of disruptions to energy supplies, and rising oil prices are fuelling inflation expectations and boosting demand for the dollar. In such conditions, European currencies remain under pressure as investors favour safer assets over risk-sensitive ones.

EUR/USD

EUR/USD continues to decline and is approaching its yearly lows, remaining under pressure following the recent bearish impulse. The failure of buyers to secure a foothold above 1.1640 last week allowed sellers to regain control and push the pair towards the recent low near 1.1440. Yearly lows are now within close reach, and weaker eurozone data or stronger US figures could intensify the downside, potentially leading to a break below 1.1400.

At the same time, if 1.1440 holds as support, a corrective rebound towards 1.1520–1.1540 may unfold.

Key events for EUR/USD:

  • today at 09:00 (GMT+2): German retail sales
  • today at 10:55 (GMT+2): change in German unemployment
  • today at 17:00 (GMT+2): US CB consumer confidence index

GBP/USD

GBP/USD is showing more pronounced weakness, having already refreshed its yearly lows amid impulsive selling pressure. The pound is weighed down by a combination of external factors, including US dollar strength, and domestic uncertainty related to the outlook for Bank of England monetary policy.

Technical analysis suggests the possibility of a corrective move higher towards 1.3250–1.3280; however, under current conditions such a recovery is likely to be limited ahead of a potential resumption of the downward move.

Key events for GBP/USD:

  • today at 09:00 (GMT+2): UK GDP
  • today at 09:00 (GMT+2): UK current account balance
  • today at 14:30 (GMT+2): US JOLTS job openings