Recent analysis from Societe Generale and RaboResearch highlights a period of range-bound trading for major currencies, with downside risks for both the Euro and the British Pound. According to Societe Generale, the EUR/USD pair remains stuck in a range, pressured by deeper cuts to Eurozone GDP forecasts for 2026/27 compared to other regions since the onset of recent conflicts. The bank expects EUR/USD to drift toward 1.12 over time, rather than 1.20, but notes that a fresh catalyst is needed to break the current range. Societe Generale also points out that recent G10 central bank actions have not sparked significant FX moves, with the ECB and BOJ hiking rates, while the RBA, Bank of Canada, and Riksbank held steady. The Euro's position in the G10 FX rankings has been mid-table, suggesting limited momentum for now [1].
On the US Dollar, Societe Generale relays Jan Groen’s view that the US economy is showing resilient growth and sticky inflation, keeping the Federal Reserve on hold for the time being. The current annual rate of core PCE inflation stands at 3.3%, with the 6-month annualized rate at 3.8%. Market pricing has backed off slightly in the last 10 days but still anticipates a rate hike in Q1 next year. Societe Generale's analysts prefer to fade dollar weakness, expecting US economic resilience and relative rate trends to support the Dollar over time [2].
For the British Pound, RaboResearch notes that softer-than-expected May UK CPI inflation data (headline at 2.8% y/y, core at 2.6% y/y) and signs of spare capacity in the labour market have contributed to tighter financial conditions. The Bank of England is seen as cautious, with market rates remaining elevated and political risks in the UK adding to uncertainty. RaboResearch expects EUR/GBP to move toward 0.87 and GBP/USD to dip towards 1.33 over the next 1–3 months. The risk that the BoE continues to talk tough over the summer, even without an official rate hike, is seen as a factor that could unsettle the Pound [3].
Analysts from both Societe Generale and RaboResearch emphasize the importance of upcoming central bank communications and economic data as potential catalysts for breaking current trading ranges. While the Euro and Pound face downside risks due to weaker growth outlooks and political uncertainty, the US Dollar is expected to remain supported by robust economic performance and sticky inflation.
CONCLUSION
The Euro and Pound are both under pressure from weaker economic outlooks and political risks, with analysts expecting further downside in the absence of new catalysts. In contrast, the US Dollar is seen as resilient, supported by strong economic data and expectations of stable or higher rates. Market participants are advised to monitor central bank communications and economic releases for signs of a shift in current trends.