Sterling slid on Tuesday while the euro also eased as the U.S. dollar firmed in advance of a closely watched speech by Federal Reserve Chair Kevin Warsh at the ECB’s Sintra forum and Thursday’s U.S. jobs number.
As of 04:56 ET (08:56 GMT), GBP/USD fell to 1.3231, down 0.15%, while EUR/USD edged lower 0.27% to 1.1392.
The dollar’s modest recovery occurred even after a lift to risk sentiment from reports that Washington and Tehran had agreed to resume nuclear negotiations. That improvement, however, has not removed market caution ahead of key U.S. central bank remarks and labor market data.
Francesco Pesole, FX Strategist at ING, warned that "USD bullish momentum has clearly faded," and added that "improved risk sentiment argues against another sharp leg higher for now, at least until Fed Chair Kevin Warsh’s Sintra speech tomorrow and Thursday’s jobs data provide clearer direction."
ING’s macro team supplied specific near-term forecasts, projecting a consumer confidence print of 97.5 versus a 94.5 consensus and JOLTS job openings for May at 7.25 million against a 7.3 million consensus. The team expects the vacancies-to-unemployed ratio to remain above 1.0, leaving the labour market signal generally healthy. ING judges Warsh’s Sintra remarks for Wednesday as carrying hawkish expectations and identified Thursday’s non-farm payrolls as the week’s critical data catalyst. ING characterises the likely effect of the day’s U.S. releases as "a neutral to moderately positive impact on the dollar from today’s data."
Sterling’s decline this session was not clearly rooted in a deterioration of UK economic fundamentals. The Office for National Statistics’ quarterly national accounts confirmed Q1 2026 GDP growth at an unrevised 0.6%, marking a six-month high and the strongest quarterly expansion since Q1 2025. Services output rose 0.8%, and annual GDP growth for 2025 was revised marginally to 1.3% from 1.4%. On a comparative basis, the UK outpaced France and Canada in G7 Q1 rankings.
However, the ONS also reported that real household disposable income per head fell 0.8% in Q1 as the implied deflator offset flat nominal income growth, a potential headwind for consumption that market participants will watch.
On the euro, ECB President Christine Lagarde’s opening remarks at Sintra on Monday struck a measured tone. ING noted she said that the "ECB response doesn’t need to be as forceful as it was in 2022- 2023, but also that the economy has grown resilient." ING added that "there is little here to prompt markets to revise expectations for another hike this year."
Looking specifically at EUR/USD, ING said it remains "more in favour of stabilisation around or just above 1.140 rather than a retesting of last week’s lows in the coming days," while also acknowledging "downside risks for EUR/USD ahead of US data and Warsh’s speech in Sintra."
Market takeaway - The dollar’s slight recovery ahead of a Fed speech and U.S. payrolls has pressured both sterling and the euro, even as UK GDP data show limited signs of strength and ECB commentary keeps euro-area tightening expectations in check.