Monthly Currency Report Summary – June 2026
Overview
June 2026 was a month shaped by central bank divergence, renewed Middle East uncertainty, UK political instability and a stronger US Dollar. The month began with markets still reacting to the ongoing Iran-US conflict and the impact this had on oil prices, inflation expectations and safe-haven demand. While periods of optimism emerged around a possible peace deal, traders remained cautious and often reverted to defensive Dollar positioning whenever headlines suggested talks were fragile.
The US Dollar was the main beneficiary of this uncertainty. Safe-haven flows supported the Greenback during periods of geopolitical stress, while a more hawkish tone from the Federal Reserve later in the month gave USD buyers an additional reason to hold their positions. The Fed kept interest rates unchanged at 3.75%, but the narrative that followed was stronger than expected and suggested that policy could remain tighter for longer through the second half of the year. This helped the Dollar regain momentum across the board, particularly against Sterling and the Euro.
Sterling had a difficult month. GBP/USD traded above 1.3450 early in June when peace deal hopes briefly improved risk appetite, but the pair later fell below 1.3200 after the Fed’s hawkish tone and weaker UK fundamentals weighed on the pound. Inflation data at 2.8% disappointed Sterling bulls because it reduced the case for a more aggressive Bank of England stance. The BoE then held rates at 3.75% in a 7-2 vote, but unlike the Fed, its tone was not especially hawkish. This left Sterling vulnerable, especially after UK claimant count data disappointed and political instability increased following Keir Starmer’s resignation.
The Euro also struggled against the Dollar. EUR/USD attempted to move toward 1.1600 early in the month, supported by expectations of ECB policy action and improving sentiment around Middle East peace talks. However, the pair was repeatedly capped by Greenback strength. By the final week, EUR/USD had fallen toward 1.1350, marking a yearly low, before stabilising slightly as downside momentum became stretched.
GBP/EUR was the clearest expression of Euro weakness. Although Sterling was under pressure against the Dollar, the Euro fell more heavily at key points, allowing GBP/EUR to climb above 1.1600 and reach its highest level since August 2025. By month-end, the pair remained firm near 1.1600 to 1.1610, although traders remained cautious ahead of further BoE, ECB and Fed commentary.
GBP/USD
GBP/USD had a challenging month, with the pair moving from early optimism above 1.3450 to sustained pressure below 1.3200. The month opened with traders watching developments in the Middle East closely. A break in the ceasefire between the US and Iran kept oil markets volatile and supported demand for the Dollar. Despite this, Cable initially found some stability below 1.3400, supported by technical levels set earlier in March.
In the first half of June, the pair attempted to recover as peace deal hopes improved risk appetite. On 15 June, GBP/USD jumped above 1.3450 overnight after Trump announced positive developments around a possible peace agreement. However, the rally quickly faded as traders adopted a take-profit stance and waited for confirmation from Iran. This showed that the market was not prepared to fully price in a resolution without clear evidence.
The main turning point came during the week of the Fed and BoE announcements. UK inflation printed at 2.8%, slightly above some expectations but still soft enough to disappoint those looking for a stronger Sterling-positive reaction. Monthly inflation eased by 0.2% compared with April, which reduced pressure on the Bank of England to adopt a more hawkish stance. This left GBP/USD subdued ahead of the central bank meetings.
The Fed then delivered a more forceful message than expected. Although rates were held at 3.75%, the accompanying narrative was interpreted as hawkish, with markets reassessing the likelihood of easier US policy later in the year. This triggered a sharp increase in Dollar demand. GBP/USD fell 0.97% in one session and moved decisively lower as the Greenback strengthened. UK claimant count data also weighed on Sterling, compounding the pressure.
The Bank of England held rates at 3.75% in a 7-2 vote. While this was broadly expected, the tone was less supportive than Sterling bulls had hoped. The BoE did not match the Fed’s hawkish stance and appeared quietly optimistic that lower oil prices and normalisation in the Middle East could help inflation pressures ease. As a result, GBP/USD failed to recover meaningfully and fell below 1.3200 in the days that followed.
Late in the month, UK politics became a more important driver. Keir Starmer’s resignation initially gave Sterling a brief lift, with traders reacting positively to the possibility of a new political chapter. GBP/USD recovered from sub-1.3200 levels and attempted to stabilise below 1.3250. However, worse-than-expected UK PMI data quickly weakened sentiment again, while stronger US fundamentals kept the Dollar supported.
By the final week, Cable remained below 1.3250. On 30 June, the pair had made marginal gains after a 0.5% rise the previous day, but upside was capped by continued USD strength. The rise in USD/JPY to a 40-year high also supported broader Dollar inflows, limiting GBP/USD progress. With no major UK data due at month-end, traders looked ahead to BoE commentary and US job market figures for direction.
Overall, June was a bearish month for GBP/USD. The pair failed to hold early gains above 1.3450, broke below 1.3200 and ended the month struggling to recover above 1.3250. The combination of a hawkish Fed, a less convincing BoE tone, softer UK data and political instability left Sterling exposed.
EUR/USD
EUR/USD also came under heavy pressure in June. The pair began the month with some hope of a move toward 1.1600, supported by expectations of ECB action and periods of Dollar weakness linked to peace deal optimism. However, these recovery attempts were repeatedly undermined by the Fed’s hawkish tone, safe-haven Dollar demand and weak Eurozone momentum.
Early in the month, EUR/USD pushed toward 1.1600 as traders looked ahead to ECB interest rate hikes and monetary policy guidance for the second half of the year. The pair was supported by the 20-day moving average at times, but upside was capped by uncertainty around the Iran-US conflict and by the market’s focus on US inflation data.
The ECB’s stance provided some support, but not enough to create a sustained Euro rally. Traders were interested in whether higher energy prices and geopolitical risks would force the ECB to maintain a tighter policy position. However, the broader market remained dominated by the Dollar. Every time geopolitical stress rose, EUR/USD struggled to build momentum.
The Fed meeting was decisive. After the Fed held rates at 3.75% and delivered a hawkish narrative, the Dollar strengthened sharply. EUR/USD fell under pressure and retreated from attempts to reach 1.1600. While the pair initially benefited from support above 1.1500 and from hopes surrounding the Iran-US peace deal, it could not resist the broader move into USD.
By 19 June, EUR/USD had fallen to its lowest level since mid-March, trading around 1.1450. Although lower oil prices from peace deal optimism might normally have helped the Euro, the hawkish Fed narrative outweighed that support. The pair approached its lower RSI boundary, which slowed further downside but did not create a strong recovery.
The final week brought further weakness. On 24 June, EUR/USD hit a yearly low near 1.1350 as Greenback demand increased. Traders were encouraged by the Fed’s tone, stronger US data and renewed uncertainty around access to oil flows through the Strait of Hormuz. The pair remained vulnerable because EU data was limited, leaving EUR/USD highly exposed to US narratives and geopolitical headlines.
There were some signs of stabilisation late in the month. On 25 June, EUR/USD found firmer ground after the RSI’s lower boundary limited additional downside. By 29 June, the pair was trading below 1.1400 but from the front foot, helped by cautious optimism and support dating back to April 2025. However, upside remained capped by ongoing Middle East uncertainty. On 30 June, the pair snapped a four-day winning streak as bulls again struggled to mount pressure toward 1.1400.
Overall, EUR/USD had a weak month. The pair moved from hopes of 1.1600 in mid-June to a yearly low around 1.1350 in the final week. Although technical conditions helped limit further selling, the Euro remained under pressure from broad Dollar strength and a lack of strong domestic catalysts.
GBP/EUR
GBP/EUR was the strongest of the three pairs in June, largely because EUR/USD weakened more sharply than GBP/USD. The cross began the month struggling to capitalise above 1.1600, but as the Euro came under sustained pressure against the Dollar, GBP/EUR gradually found support and eventually climbed to its highest level since August 2025.
In the first half of the month, GBP/EUR was capped around 1.1600. Sterling faced uncertainty from UK data and BoE expectations, while the Euro had some support from ECB rate hike expectations. This kept the pair contained, with traders reluctant to make aggressive directional bets before central bank announcements.
After the Fed meeting, the pair initially moved lower as Cable took a sharper hit than EUR/USD. GBP/EUR fell below 1.1550, with technical analysis suggesting further downside was possible. However, support from late May helped limit losses, and the pair soon recovered as EUR/USD began to weaken more aggressively.
The resignation of Keir Starmer provided a short-term lift for Sterling. On 23 June, GBP/EUR climbed 0.6%, its largest daily gain since 5 January, as traders reacted positively to the possibility of political change in the UK. At the same time, the weaker Euro added further support. The pair held around 1.1590 despite some profit-taking.
On 24 June, GBP/EUR climbed above 1.1600 and reached its highest level since August 2025. This move was driven mainly by Euro weakness, as EUR/USD hit a yearly low while GBP/USD remained weak but comparatively more stable. The pair continued to hold above 1.1600 on 25 June, despite some take-profit selling.
By month-end, GBP/EUR remained resilient. On 30 June, the pair traded back above 1.1610 as the Euro softened again during the early European session. With room still available on the upside from a technical perspective, traders considered the possibility of further gains if US data continued to affect EUR/USD more heavily than GBP/USD.
Overall, GBP/EUR was supported by relative Euro weakness rather than outright Sterling strength. The cross ended June near recent highs, with 1.1600 becoming a key support and resistance area. A sustained break higher would likely require either stronger UK guidance from the BoE or further weakness in EUR/USD.
Outlook for July 2026
July begins with markets still highly sensitive to central bank commentary, US labour market data and Middle East developments. GBP/USD will need stronger BoE support or weaker US data to recover meaningfully above 1.3250. If the pair fails to hold above 1.3200, the downside could reopen toward the lows seen after the Fed meeting.
EUR/USD remains vulnerable below 1.1400. A recovery above this level would help stabilise sentiment, but the pair needs a clearer catalyst from the ECB or softer US data to build momentum. Without that, the recent yearly low near 1.1350 may be tested again.
GBP/EUR starts July in a stronger position, with 1.1600 now the key level to watch. If Euro weakness persists, the pair may attempt to extend toward new highs. However, if EUR/USD stabilises or the BoE sounds more cautious, GBP/EUR could slip back toward 1.1550.
Overall, June reinforced the dominance of the US Dollar and showed how quickly policy narratives can shift FX markets. The Fed’s hawkish stance, limited BoE conviction, weak Euro momentum and UK political developments all contributed to a volatile end to Q2. July is likely to remain reactive, with traders waiting for clearer direction from central banks, US employment data and the next stage of US-Iran peace talks.