Key Points:

EUR/USD:

• Breaches 1.13: EUR/USD hits its highest level since July 2023, surpassing the 1.1276 resistance mark.

• Drivers: Main tailwinds include USD softness and reduced fears of a US-EU trade war after a tariff pause.

• Caution Ahead: Sentiment is tempered by weak April Sentix results and anticipation for the ZEW survey, which may reflect growing scepticism over EU stimulus effectiveness.

• ECB Outlook: ECB is likely to retain an easing bias, but dovish support may be seen as growth-positive, not EUR-negative.

• Positioning: One-month EUR/USD risk reversals show the most EUR-positive sentiment since March 2020, with CFTC data showing slowly growing net longs.

• Short-Term View: ANZ is bullish EUR/USD due to intensifying USD headwinds.

GBP/USD:

• Above 1.30: Cable rises primarily on USD decline, despite mixed UK data and no direct UK-specific catalyst.

• Key Event Ahead: UK CPI (alongside wages and labour market figures) is in focus. Services inflation remains sticky despite falling headline figures.

• Limited Impact from CPI: Even a firmer CPI print is unlikely to significantly strengthen the GBP in the near term as global dynamics dominate.

• Near-Term View: ANZ sees GBP path of least resistance as higher, driven more by external factors than UK data.

Conclusion:
Both EUR and GBP are benefiting from a repricing of USD risk as US trade policy volatility eases and economic concerns grow. While risks remain from data and central bank events, ANZ maintains a constructive outlook for both EUR/USD and GBP/USD in the near term.