📊 FX Market Outlook: Inflation, Geopolitics & Central Bank Focus.

USD – Remains firm, supported by safe-haven demand as Middle East tensions escalate, with markets awaiting key US inflation data.

EUR – Faces modest downside pressure, as geopolitical risks and rising energy prices weigh on sentiment despite a quiet eurozone calendar.

GBP – Remains relatively resilient, but attention is shifting to UK politics, GDP data, and Bank of England commentary after last week’s strong rally.

USD:

The dollar is trading in a firm position this morning, supported by escalating tensions in the Middle East and higher energy prices. Iran’s announcement that the Strait of Hormuz has been closed following further US strikes has increased demand for safe-haven assets. Markets now turn their attention to speeches from Federal Reserve Governors Waller and Bowman today, ahead of tomorrow’s closely watched US CPI report. Inflation is expected to ease from 4.2% to 3.8%, while investors will also look to Chair Warsh’s testimony this week for clues on the Fed’s next move.

EUR:

The euro is likely to remain driven by developments in the US, with relatively little eurozone data due this week. Several ECB policymakers are scheduled to speak today, but rising energy prices and renewed geopolitical tensions in the Gulf are creating headwinds for the single currency. Unless the ECB delivers a more hawkish tone than expected, EUR/USD is likely to remain sensitive to US inflation data and broader market sentiment.

GBP:

Sterling remains well supported following last week’s rally, although attention has now shifted to domestic events. Bank of England Governor Andrew Bailey speaks tomorrow, while May GDP figures are released on Thursday. Political developments also remain in focus, with Andy Burnham expected to become Labour leader next week. Markets will also hear from BoE Chief Economist Huw Pill today. Without fresh positive surprises, sterling may struggle to extend its recent gain