Monthly Currency Report Summary – June 2025

Overview: June 2025 presented a dynamic and often turbulent month for the foreign exchange market, heavily influenced by macroeconomic indicators, geopolitical tensions, central bank policies, and market sentiment. The three major pairs tracked – GBP/USD (Cable), EUR/USD, and GBP/EUR – reflected contrasting developments, ranging from risk-off environments tied to Middle Eastern conflicts to rate cut speculation from major central banks. GBP/USD hit multi-year highs, EUR/USD capitalised on USD weakness, and GBP/EUR oscillated amid divergent economic performance and policy outlooks.

Cable had a robust month, climbing to multi-year highs and demonstrating strong resilience despite intermittent corrections. The pair opened June with bullish sentiment, pushing past 1.3550 amid USD weakness stemming from US-China trade deal concerns and inflationary anxiety.

• Early June: Sterling opened the month strong, buoyed by positive UK inflation data and a weaker USD. Resistance near the 1.3550 level initially held, but strong risk sentiment and PMI data allowed the pair to break through mid-level resistance. The BoE’s cautious tone, paired with investor optimism around the UK economy, contributed to the pair’s bullish momentum. Weakness in the USD provided additional lift, especially in light of comments from the Fed suggesting economic uncertainty.
• Mid-June: Continued gains saw the GBP/USD touch 1.3632 before retracements set in due to profit-taking and a hawkish inflation reading from the US. A temporary dip below 1.3450 followed disappointing UK unemployment data, but traders remained optimistic amid BoE signals of maintaining a gradual path on interest rates. Traders were also influenced by strong average earnings reports and resilient consumer sentiment in the UK.
• Late June: The pair peaked at 1.3771, the highest level since late 2021. However, upside was capped by overbought RSI levels and signs of consolidation began. Market focus shifted to geopolitical tensions in the Middle East and Donald Trump’s repeated criticisms of the Federal Reserve, which impacted USD confidence. The Cable remained supported near 1.3700, drawing strength from global risk appetite and persistent scrutiny of US economic stability.

Key Drivers:

• Strong UK inflation and resilient economic growth data
• BoE’s cautious but not overly dovish rate stance
• USD fluctuations tied to Fed credibility concerns and geopolitical risks
• Positive UK wage and consumer sentiment figures

The EUR/USD experienced a month of cautious gains, driven primarily by USD weakness rather than Eurozone strength. Early in the month, the pair hovered around 1.1450, supported by dovish expectations for US monetary policy and safe-haven outflows.

• Early to Mid-June: With the ECB expected to continue its dovish trajectory, upside in EUR/USD was limited. The pair tested highs above 1.1500 but failed to break out significantly due to weak Eurozone Sentix and PMI figures. The manufacturing and services sectors displayed contractionary tendencies, undermining sentiment in the single currency. Still, traders took advantage of favourable USD conditions to push the pair upward.
• Mid-June: Aiding EUR strength, US inflation missed expectations and a dovish Fed narrative emerged. EUR/USD climbed past 1.1550 but remained constrained by ECB’s policy tone and broader geopolitical uncertainties. Hawkish statements from some ECB officials created temporary upward pressure, but market participants remained cautious ahead of further interest rate cuts.
• Late June: The EUR/USD reached highs near 1.1750 by month-end. Political pressure on the Fed from the US President and anticipation of a September rate cut by the Fed supported the Euro. However, weak Eurozone retail data and looming ECB cuts curtailed further upside. Market volatility was further shaped by investor reactions to NATO’s summit developments and US GDP releases, which occasionally supported the Greenback.

Key Drivers:

• Weak USD due to political scrutiny on the Fed and inflation
• Eurozone data mixed: strong in places but generally lacking momentum
• ECB expected to cut rates further, limiting EUR gains
• Geopolitical uncertainties influencing investor risk appetite

The Sterling-Euro pair reflected alternating strength depending on respective performances against the Greenback. Throughout June, the pair remained volatile, trading mostly between 1.1670 and 1.1900.

• Early June: The pair struggled for direction, opening around 1.1860 and facing downside pressure due to relatively stronger Euro resilience. Market caution was elevated amid global uncertainties, and traders were reluctant to place large directional bets.
• Mid-June: Weak UK jobs data and fears of BoE rate cuts drove GBP/EUR down below 1.1750. RSI readings suggested potential oversold conditions, limiting further downside. Economic pessimism in the Eurozone helped the Sterling remain somewhat resilient. Nonetheless, bearish momentum prevailed due to the accumulation of weak UK growth forecasts.
• Late June: The pair rebounded slightly but stayed under pressure as the EUR gained momentum. Traders avoided committing heavily due to equal uncertainty around both BoE and ECB paths. Support was seen at 1.1673, while upside attempts near 1.1750 faced repeated rejection. By month-end, the pair showed signs of stabilisation amid broader FX indecision and narrowing interest rate expectations.

Key Drivers:

• Diverging expectations for BoE and ECB policy
• Shifts in risk appetite due to Middle Eastern tensions
• Relative economic performance and inflation pressures
• Technical resistance and support levels (notably 1.1670 and 1.1750)

1. Geopolitical Risk:
   • The Iran-Israel-Qatar conflict significantly influenced risk sentiment. The USD gained as a safe haven early in the conflict but lost ground as tensions eased or shifted in focus.
   • NATO summits and ceasefire announcements introduced bursts of volatility, particularly in the second half of the month, as investors speculated on future military or diplomatic escalation.
2. Central Bank Policies:
   • Federal Reserve: Under political pressure, with growing expectations of a September rate cut despite Powell’s resistance to further easing in 2025. Trump’s public criticism of Powell stoked investor unease, fuelling demand for alternative currencies.
   • Bank of England: Maintained a cautious approach, reinforcing that policy would be data-driven. Indications that the tightening cycle was nearing its end suggested more stability for the Sterling, albeit within a limited appreciation range.
   • European Central Bank: ECB cut rates during June and maintained a dovish stance, adding weight to the EUR unless counteracted by USD weakness. Traders remain watchful for July meeting clues.
3. Inflation and Employment Data:
   • UK: Inflation remained above target, justifying BoE’s cautious tone. Wages continued to climb, keeping expectations of further tightening in play.
   • US: Mixed inflation and employment data; consumer sentiment and GDP readings played key roles in shaping Fed outlook. Retail and consumer sentiment figures showed volatility, reinforcing the market’s indecision.
   • Eurozone: Data was largely disappointing; PMIs and retail sales underperformed. The ECB’s June rate cut failed to meaningfully stimulate investor confidence.

The FX market is likely to remain volatile moving into July, with three themes dominating:

• US Political Risk: Continued attacks on Fed independence may drive USD sentiment. Investors will look for Powell’s response and any signs of central bank restructuring if political pressures mount.
• BoE Policy Guidance: With inflation and growth holding, traders will watch for any pivot toward rate cuts. Market expectations are still pricing two small cuts by year-end.
• ECB Decision-making: If the ECB cuts rates again, expect EUR downside unless the USD falters further. However, if Eurozone data shows signs of recovery, EUR could consolidate or even climb modestly.

Forecast Ranges (Short-Term):

• GBP/USD: 1.3600 – 1.3800
• EUR/USD: 1.1600 – 1.1750
• GBP/EUR: 1.1650 – 1.1800

Conclusion: June was a month of multi-year highs, volatility driven by geopolitical fears, and rising political pressure on central banks. The Greenback’s safe-haven status was challenged, the Euro remained sensitive to data and ECB outlook, and the Sterling took advantage of moments of risk-on sentiment. As we enter July, traders are likely to remain cautious, focusing on inflation data, political commentary, and central bank forward guidance to set their directional bias. Geopolitical tensions, particularly in the Middle East, and further developments in global trade negotiations will continue to be major volatility drivers.

With central banks navigating a delicate balance between inflation control and economic support, market participants should brace for more reactive trading patterns. Informed, flexible strategies will be essential for success in this evolving environment. The continued interplay between macroeconomic data, monetary policy, and geopolitical narratives ensures the coming month will be just as unpredictable—and potentially just as profitable—for FX traders as June proved to be.