**EUR/USD, GBP/USD, and EUR/GBP Forecasts: Currencies Sluggish on Friday**
*By James Hyerczyk, FXEmpire*
**Overview**
Friday’s forex session concluded with sluggish activity for major European currencies, as markets reacted to recent data releases and braced for central bank signals in the coming weeks. Both EUR/USD and GBP/USD struggled to find direction, ending the week in narrow ranges after a period of volatility following key economic reports. Cross currency pair EUR/GBP also moved sideways, reflecting uncertainty about the comparative strength of the euro and pound in the near-term.
In the broader context, traders continue to weigh European Central Bank (ECB) and Bank of England (BoE) policy outlooks against recent U.S. data and Federal Reserve remarks. With inflation dynamics and growth forecasts showing some divergence across the Atlantic, the lack of clear momentum in the forex market is unsurprising. This article breaks down the latest developments, analyzes key technical levels, and explores what could drive these currency pairs in the days ahead.
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**EUR/USD: Stuck in a Holding Pattern**
*Summary of Recent Price Action*
– EUR/USD spent much of Friday consolidating near the 1.0800 level, with limited follow-through from earlier in the week.
– The pair came under downward pressure after a warmer-than-expected U.S. inflation print boosted the dollar, but found some support at lower technical levels.
– Weekly performance was choppy, reflecting commingling influences from European economic indicators and shifting market sentiment on Fed rate policy.
*Macro Drivers*
– U.S. inflation readings have recently come in above expectations, leading markets to further reduce bets on near-term Fed rate cuts.
– Meanwhile, euro zone economic activity has shown gradual improvement but remains below trend, keeping the ECB on a cautious footing regarding future policy easing.
– Comments from ECB officials highlight a data-dependent approach with only tentative steps toward normalization, in contrast to the Fed’s still-hawkish tilt.
*Technical Levels to Watch*
– **Immediate support**: The 1.0780 region provided a floor, with additional backing at the psychological 1.0750 mark.
– **Near-term resistance**: The 1.0850 and 1.0900 zones are likely to cap rallies in the absence of a strong fundamental catalyst.
– Both 50-day and 200-day moving averages hover not far below current levels, adding to the technical congestion.
*Outlook*
– With both inflation and growth outlooks uncertain, traders look to upcoming ECB commentary and further U.S. economic data for direction.
– Any sustained move above 1.0900 would require a dovish surprise from the Fed or a meaningfully hawkish turn from the ECB, while a break below 1.0750 could open the way for a deeper correction toward 1.0650.
– For now, the cross-currents suggest more range-bound trading as market participants await clarity on central bank trajectories.
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**GBP/USD: Trapped Between Headwinds and Hope**
*Summary of Recent Price Action*
– GBP/USD endured modest swings but ended Friday little changed on the week, stuck in a fairly tight band near the 1.2700 level.
– The pound has struggled to regain upward momentum after reversing gains from strong post-NFP moves earlier this month.
– Lackluster UK data and uncertainty around the BoE’s next policy steps have tempered enthusiasm for the currency even against a softening dollar.
*Macro Drivers*
– Recent U.K. economic releases have painted a mixed picture. While inflation remains above the BoE’s target, wage growth has slowed and activity data has been underwhelming.
– Markets have begun to price in BoE rate cuts later in the year, which reduces sterling’s relative yield appeal.
– Persistent U.S. dollar strength, fueled by higher-for-longer Fed rate expectations, limits the upside for GBP/USD.
*Technical Levels to Watch*
– **Short-term
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