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The euro made sweeping gains on Thursday as the US dollar struggled yet again.
The euro made a series of eye-catching gains yesterday as currency markets shrugged off the latest instalment in the trade saga. Over the course of Thursday, EUR/USD strengthened by over a cent and GBP/EUR dropped by a similar margin to reach its weakest level this week.
Much of the recent media attention has centred on the US dollar, which has allowed the euro to sneak through the crack and build some new momentum. However, with another interest rate decision scheduled for next week, it’s uncertain just how long the euro can sustain this pace.
More unconvincing data from the American economy helped the pound and the euro record daily gains over the US dollar. Both initial and continuing jobless claims were on the rise in recent weeks, while GDP figures from the first three months of 2025 were upgraded slightly in the second estimate but still showed a shrinking economy.
The Trump administration appealed the court ruling that threatened to undo much of its aggressive tariff regime. Yesterday evening, a US court temporarily reinstated the tariffs while it heard that appeal. The complex constitutional battle currently waging essentially rests on whether the President must seek the approval of Congress before setting tariffs.
Peter Kažimír, governor of the National Bank of Slovakia and a member of the European Central Bank’s (ECB) governing council, has been found guilty of bribery just days before his term was set to end. Despite facing a hefty fine and with his future in doubt, Kažimír will still be allowed to vote in the ECB’s next interest rate meeting on 5 June.
On the topic of central bankers, Federal Reserve Chair Jerome Powell met with President Donald Trump in the White House yesterday. According to a readout for the press, Powell did not speak about the path of interest rates, “except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook.” This not-so-subtle language suggested Trump may have exerted more pressure on the nominally independent Fed.
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GBP: Continental concern
Sterling had a bad day in the office against the euro on Thursday, and it might have more of those to come given the sunny outlook for the euro. With sustainable debt levels, low interest rates compared to the Bank of England and the prospect of investment from central government, euro buyers would be wise to avoid the risk that the euro’s rally has further to run.
GBP/USD: the past year
EUR: Gearing up for a cut
Currency markets believe the ECB is lining up another quarter-point cut to interest rates next week, which would take the main rate from 2.25% to 2%. If this could weaken the euro, it isn’t showing it right now, having recorded another impressive run of advances against its chief rivals.
GBP/EUR: the past year
USD: Fed dangles rate carrot
As Jerome Powell headed to the White House and the US dollar suffered from another bout of instability, it was another policymaker, Austan Goolsbee, who offered an interesting opinion. If sweeping tariffs were avoided through a deal or something of that sort, interest rates could and should come down, Goolsbee argued.
EUR/USD: the past year
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