Markets are bracing for a pivotal week packed with high-impact economic events that could shape monetary policy expectations across several major economies. From U.S. retail sales and the Federal Reserve's rate decision to key inflation data out of the UK and employment figures from Australia and New Zealand, investors will be watching closely for clues on growth, inflation, and central bank direction. In Europe, Christine Lagarde is calling for decisive action to elevate the euro's global standing, while in the UK, mounting economic weakness is pressuring the Bank of England to consider further rate cuts. Against this backdrop, EUR/GBP remains technically bullish, though negative divergence signals potential near-term hesitation.
Overview
Markets are bracing for a pivotal week packed with high-impact economic events that could shape monetary policy expectations across several major economies. From U.S. retail sales and the Federal Reserve's rate decision to key inflation data out of the UK and employment figures from Australia and New Zealand, investors will be watching closely for clues on growth, inflation, and central bank direction. In Europe, Christine Lagarde is calling for decisive action to elevate the euro's global standing, while in the UK, mounting economic weakness is pressuring the Bank of England to consider further rate cuts. Against this backdrop, EUR/GBP remains technically bullish, though negative divergence signals potential near-term hesitation.
Key Economic Events
Tuesday 15:30 (GMT+3) – USA: Retail Sales m/m (USD)
Wednesday 09:00 am (GMT+3) – UK: CPI y/y (GBP)
Wednesday 15:30 (GMT+3) – USA: Unemployment Claims (USD)
Wednesday 21:00 (GMT+3) – USA: Federal Funds Rate (USD)
Thursday 01:45 am (GMT+3) – New Zealand: GDP q/q (NZD)
Thursday 04:30 am (GMT+3) – Australia: Employment Change (AUD)
Thursday 10:30 am (GMT+3) – Switzerland: SNB Policy Rate (CHF)
Thursday 14:00 (GMT+3) – UK: Official Bank Rate (GBP)
Friday 09:00 am (GMT+3) – UK: Retail Sales m/m (GBP)
Technical Analysis
Following a dip to 0.83548 on May 28, EURGBP rebounded, supported by a combination of technical strength and improving fundamentals. The recovery gained momentum after a classic failure swing reversal pattern, with the higher low at 0.84062 holding above its predecessor and confirmed by a break above the interim peak at 0.84491—indicating a meaningful shift in trend dynamics.
The technical outlook was further bolstered by a bullish Golden Cross as the 20-period EMA crossed above the 50-period EMA, reinforcing underlying buying interest. Although price action remains capped below the recent daily high of 0.85456, the broader uptrend structure remains intact.
Momentum indicators continue to favor the bulls: the Momentum Oscillator remains firmly above the 100 baseline, while the RSI trades comfortably above 50, reflecting sustained positive sentiment. That said, the presence of a negative divergence between the price and the Momentum Oscillator warrants a degree of caution, suggesting that while the uptrend persists, the pace may moderate in the near term.
Potential Upside Targets
If buyers maintain control of the market, traders may shift their focus to the following four potential resistance levels:
0.85456: The first level of resistance is determined at 0.85456, which reflects the daily high marked on June 12.
0.85905: The second resistance level is observed at 0.85905, which aligns with the 61.8% Fibonacci Retracement drawn from 0.87373 to 0.83548.
0.86230: The third price objective is projected at 0.86230, representing the peak formed on April 21.
0.87373: An additional price objective is projected at 0.87373, representing the highest price in 2025.
Potential Downside Targets
If sellers take control of the market, traders may focus on the following four key support levels:
0.84893: The initial support level is estimated at 0.84893, representing the weekly Pivot Point, PP, estimated using the standard methodology.
0.84584: The second support level is determined at 0.84584, aligning with the daily high from May 21 and coinciding with the 50-period EMA.
0.83548: The third support level is established at 0.83548, reflecting the swing low from May 28.
0.83145: An additional downside target is noted at 0.83145, corresponding to the low point marked March 28.
Fundamentals
ECB President Christine Lagarde is urging European policymakers to seize what she calls a "global euro moment" as confidence in the US dollar falters under Donald Trump's erratic trade policies. In a public commentary, she emphasized the need to strengthen Europe's geopolitical credibility, economic resilience, and legal integrity to elevate the euro's global role. Despite growing interest in Europe, the euro's international use has stalled, highlighting the scale of the challenge. Lagarde stressed that this shift won't happen automatically—it must be earned through decisive action, deeper integration, and joint EU efforts like shared defense financing and expanded liquidity support abroad.
On the other hand, weak economic data and a deteriorating labor market are ramping up pressure on the Bank of England (BOE) to cut interest rates further. The UK economy contracted in April amid rising payroll taxes and trade disruptions from US tariffs, leading to over 250,000 job losses since the latest budget. Despite still-elevated inflation and recent oil price spikes, markets now see an 80% chance of a rate cut in August. While the BOE is expected to hold rates steady at 4.25% this week, a dovish shift in tone or voting split could signal more easing ahead as policymakers balance inflation risks with signs of economic fragility.
Conclusion
This week's packed economic calendar could prove pivotal for currency markets, especially EURGBP. With central banks navigating diverging policy paths—Europe pushing for a stronger global euro presence and the UK grappling with mounting economic pressures—the stakes are high. Technicals for EURGBP remain bullish, but caution is warranted due to early signs of momentum divergence. Traders should remain alert to key data releases and policy signals that could shift sentiment and redefine near-term direction for both the euro and the pound.