Analysts at Goldman Sachs offer an encouraging picture for the euro, providing some respite to bulls while advocating further upside in EUR/GBP.

Key quotes

"Last week's ECB meeting initially seemed to send a dovish message, with a policy path that was essentially unchanged from earlier in the year, despite significant upside inflation surprises since that time.”

“However, ECB speakers have since emphasized that a rate hike over the summer is still possible under the latest guidance. At the meeting, President Lagarde noted downside risks to the activity outlook, but recent developments look a bit more market-positive. President Macron has been re-elected, which should be net positive for EUR.”

"At the same time, the flash reading of the April PMIs suggest that reopening momentum in the services sector has more than offset the impact of renewed supply chain disruptions on the manufacturing side, with both adding to inflationary pressures. With this in mind, we see room for some tactical relief for the Euro, including further EUR/GBP upside."