Trade Tensions and CPI Set to Move EURUSD & GBPUSD
Trade Tensions and CPI Set to Move EURUSD & GBPUSD
The ongoing U.S. government shutdown, renewed trade tensions with China, and key economic releases from the U.S. and Europe shaped last week’s forex markets. Both EURSD and GBPUSD experienced volatility as traders weighed developments in monetary policy, inflation data, and political events. This week, investors will closely monitor CPI reports, PMIs, and potential government actions, which could significantly influence the direction of these major currency pairs.
Euro Rises as Dollar Weakens
EURUSD ended last week’s trading session lower as the U.S. government shutdown entered its fourth consecutive week, adding to uncertainty surrounding the latest tariffs imposed by President Trump on Chinese goods. The ongoing shutdown has delayed the release of key economic indicators, leaving markets in the dark about the health of the world’s largest economy.
On the European side, the Euro found some support after France’s new Prime Minister, Sebastien Lecornu, secured a confidence vote in parliament, helping the common currency gain ground against the U.S. Dollar.
CPI, PMI, and Trade Tensions Could Drive EURUSD This Week
This week, traders and investors will focus primarily on any potential U.S. government reopening plan and developments in the ongoing U.S.-China trade dispute. The U.S. CPI report is expected to be a key catalyst for market movement, while scheduled speeches from Federal Reserve (Fed) and European Central Bank (ECB) officials may offer further insight into the future direction of monetary policy.
On Friday’s economic calendar, the Eurozone manufacturing PMI is expected to edge lower to 49.5, while the U.S. CPI is thought to remain steady at 0.3% and the U.S. Services PMI unchanged at 54.2.
EURUSD Technical Outlook
Technically, the pair remains neutral after last week’s close above the 38.2% level at 1.1651. Buyers took profit on their long positions at 1.1700 and are now staying on the sidelines, waiting for a new entry opportunity. Current position sentiment stands at 50% BUY and 50% SELL.
EURUSD chart, October 18, 2025. Source: TenTrade.com
GBPUSD Falls as U.S. Shutdown and Weak U.K. Jobs Data Weigh
GBPUSD closed last week’s trading session lower as the U.S. government shutdown entered its fourth consecutive week, increasing market uncertainty over the latest tariffs on Chinese goods imposed by President Trump. The continued government closure has delayed key U.S. economic data releases, leaving traders uncertain about the health of the world’s largest economy. On the British pound side, disappointing U.K. employment data may add pressure on the Bank of England to consider further rate cuts, adding additional downside pressure on the GBPUSD pair.
GBPUSD Forecast: Trade War and Inflation Data Drive Market Moves
This week, traders and investors will focus primarily on President Trump’s ongoing trade war with China. CPI data from both the U.S. and the U.K. are expected to be the key catalysts driving market volatility. A potential U.S. government reopening could strengthen the U.S. dollar further, putting additional downward pressure on the GBP/USD pair.
On the economic calendar this week, key data releases include the U.K. CPI on Wednesday, expected to rise to 3.7%. On Friday, U.K. retail sales are forecast to decline by 0.2%, while the U.K. manufacturing PMI is expected to remain unchanged at 46.2. In the U.S., CPI is projected to stay steady at 0.3%, with the Services PMI holding at 54.2.
Technically, the pair remains neutral after last week’s close above the 38.2% level at 1.3422. Long positions are still open at 1.3369, targeting profits above 1.3500. Current position sentiment stands at 75% BUY and 25% SELL.
GBPUSD chart, October 18, 2025. Source: TenTrade.com
Key Takeaways
U.S. Shutdown: The shutdown is delaying economic data, adding uncertainty to EURUSD and GBPUSD.
Trade Tensions: Ongoing U.S.-China trade issues are pressuring the Dollar and market sentiment.
Euro Support: The Euro gained after France’s Prime Minister secured a confidence vote.
U.S. CPI: The upcoming CPI report will be a key driver for both EURUSD and GBPUSD.
ECB & Fed Speeches: Central bank speeches will offer insight into future monetary policy.
PMI Data: Eurozone manufacturing PMI is expected to fall; U.S. Services PMI should hold steady.
GBPUSD Pressure: Weak U.K. jobs data and trade tensions are weighing on GBPUSD.
U.K. CPI & Retail Sales: U.K. CPI is rising, but retail sales and PMI are weak.
Technical Outlooks: Both EURUSD and GBPUSD are neutral, with balanced buying and selling pressure.
Market Focus: Investors will watch trade, inflation data, and government actions this week.
For more detailed economic calendar events please visit our live economic calendar on:
https://tentrade.com/economic-calendar/
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