Market Report: USD Under Pressure, EUR Pauses, GBP Reassessed

With major players eyeing looming trade deadlines, tariff threats, and unfolding central bank rhetoric, currency markets are entering a high-stakes period. Here’s how the pound, euro, and dollar are positioned, and what could trigger the next big move.

USD Slides as Tariff Deadline Looms and Fed in the Firing Line

The U.S. dollar remains close to multi-year lows as investors grapple with President Trump’s impending tariff hikes set for July 9, which threaten to escalate trade tensions amid fading risk appetite. Meanwhile, souring sentiment toward the Fed driven by mounting national debt, political criticism of Chair Powell, and strong bets on rate cuts, adds further headwinds. Watch for Wednesday’s release of trade letters and Friday’s U.S. payrolls data to shape expectations and guide the dollar’s next move.

EUR Faces Pressure as ECB Eyes Currency Overreach

The euro has eased slightly but remains near its 2025 highs (~1.18), despite ECB members warning that further appreciation, especially over the $1.20 mark, could harm eurozone export competitiveness. With inflation steady at the ECB’s 2% target and rate cuts seemingly paused into July, markets are now closely monitoring eurozone trade data and any signs of ECB discomfort over currency strength. A sustained rally could prompt some tension between policy makers and markets.

GBP Rethought as UK Fiscal Worries Surface

Sterling has lost ground after rallying earlier in June, now trading just above $1.36 as UK government “policy U-turns” trigger concerns over fiscal credibility. The reversal of welfare and energy subsidy cuts raised speculation of additional tax hikes or budget strain—pressures that tend to weigh on the pound. This week, the focus shifts to UK–EU meetings and UK fiscal signals that may recalibrate market sentiment; a breakout below key support could mark a turning point.

As markets navigate a blend of political deadlines, central bank dynamics, and structural shifts in risk appetite, the path ahead remains uncertain. Watch for July 9 tariff updates, U.S. payroll data, and Eurozone trade figures—any could shift the narrative sharply. Positioning now could make the difference.

Market Report by Sam Balla-Muir