As we move into the third week of June 2025, financial markets remain highly sensitive to a combination of macroeconomic data, central bank direction, and intensifying geopolitical flashpoints. With U.S. inflation still elevated, Fed commentary under close scrutiny, and renewed tensions in the Middle East and Eastern Europe, traders should stay alert for volatility across all major asset classes.

Global Economic Overview

The U.S. economy continues to show mixed signals. While the service sector remains strong, inflation remains stubbornly above the Fed’s 2% target. Last week’s CPI came in hotter than expected, reinforcing the “higher-for-longer” interest rate narrative. The Federal Reserve remains hawkish, signaling caution before any potential rate cuts.

Europe, on the other hand, continues to struggle with tepid growth. Germany, the region’s powerhouse, is facing stagnation, while the ECB juggles between controlling inflation and avoiding recession. The euro remains pressured as investor sentiment sours.

In China, policymakers have stepped up support measures, targeting infrastructure and credit growth. However, consumer sentiment remains fragile, and tensions with Taiwan continue to cast a shadow over long-term stability.

 Geopolitical Risk Watch

This week, geopolitical developments are taking center stage:

U.S.–Iran–Israel Tensions: A U.S. naval ship was targeted by a drone near the Strait of Hormuz, prompting fears of wider conflict. Israel has issued stern warnings to Iran following a string of proxy attacks across the region. Markets have responded with a spike in oil prices and increased demand for safe-haven assets.

Russia–Ukraine Conflict: Russian forces intensified missile strikes on Ukrainian infrastructure over the weekend. The U.S. has pledged additional defense support, straining already-tense relations. This is fueling risk-off sentiment in European markets.

Red Sea Shipping Threats: Houthi militants have resumed targeting commercial vessels, again disrupting global shipping routes. This has contributed to higher freight costs and renewed pressure on energy and commodity supply chains.

Key Economic Events This Week (June 17 – 21)

Tuesday, June 18

U.S. Retail Sales (MoM)

Eurozone CPI Final (YoY)

Wednesday, June 19

Fed Chair Powell Testimony

Crude Oil Inventories

Thursday, June 20

U.S. Initial Jobless Claims

Bank of England Interest Rate Decision

Friday, June 21

Japan CPI (YoY)

U.K. Retail Sales

 Fundamental Analysis

1. Central Bank Policy

The Fed’s rhetoric remains hawkish, but traders are watching closely for any dovish shift following next week’s PCE inflation report. In the U.K., markets expect the BoE to hold rates steady amid sticky inflation and weak GDP growth.

2. Inflation Trends

U.S. CPI remains elevated, with services inflation being the key driver. PPI data later this month will be crucial in confirming trends. Energy price spikes due to geopolitical risks could reignite broader inflation.

3. Safe-Haven Demand

Amid escalating global tensions, we’re seeing renewed flows into gold, the U.S. dollar, and the Swiss franc. Gold is holding above $2,370/oz, with upside potential if uncertainty grows further.

4. Oil and Commodities

WTI crude has rebounded above $81/barrel due to supply disruption fears in the Middle East and Red Sea. Further tensions could push oil toward the $85 level.

 Technical Analysis; GBPUSD

Looking at GBPUSDD on the 4-hour timeframe we can see that price is very bullish however price seems to be hitting a strong resistance which could potentially mean that we can expect abit of a pull back before breaking out of this resistance level. We can see the marked levels on the chart that we can expect price to potentially reverse from and continue with the bull run.

 Final Thoughts

We’re entering a data-heavy week with an added layer of geopolitical uncertainty. Inflation, interest rates, and risk sentiment will drive market moves—but don’t underestimate the impact of surprise headlines from the Middle East or Eastern Europe.

Risk management is your greatest tool—use it. Stay informed, stay sharp, and trade with purpose.

Wishing all Propel Capital traders a focused and profitable week ahead.