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EUR/GBP remains supported above 0.8623 as bulls protect the short-term uptrend.
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Ongoing UK economic and fiscal worries weigh on the Pound, while the Euro awaits developments in EU-US trade discussions.
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Diverging rate expectations—steady ECB policy versus potential BoE rate cuts—may further boost EUR/GBP momentum.
The Euro (EUR) edged higher against the British Pound (GBP) on Friday, buoyed by growing expectations of a potential interest rate cut by the Bank of England (BoE) and rising fiscal concerns in the UK, both of which continue to pressure the Pound.
At the time of writing, EUR/GBP is trading around 0.8640, with both technical and fundamental signals favoring the bulls.
From a macroeconomic perspective, the Euro holds a relative advantage. Softer-than-expected UK labor market data released Thursday reinforced speculation that the BoE may move toward monetary easing in the near term. In contrast, the European Central Bank (ECB) has adopted a more cautious tone, refraining from dovish signals despite a lack of significant disinflation in the latest CPI figures.
With no major economic releases scheduled for Friday, sentiment and positioning are expected to steer market direction. Any updates or delays stemming from the EU-US trade talks held in Washington this week could act as a key catalyst, especially with the August tariff deadline approaching.
EUR/GBP Technical Analysis
The EUR/GBP pair remains resilient above key support at 0.8623, aligned with the 23.6% Fibonacci retracement of the March-to-April rally. This support level has proven significant, with bulls continuing to defend it as part of a broader short-term uptrend.
Although the pair faced a rejection near the 0.8700 psychological level earlier in the week—as shown by the long upper wick on Wednesday’s daily candle—the pullback was limited. Price action still hovers above the 20-day Simple Moving Average (SMA) at 0.8612, the 50-day SMA at 0.8512, and the 100-day SMA at 0.8486. These moving averages reinforce the underlying bullish momentum.
The Relative Strength Index (RSI) sits at 61, indicating favorable momentum for buyers without entering overbought territory.
EUR/GBP daily chart
If EUR/GBP holds above the 0.8623 level and maintains support at the 20-day SMA, the upward trend is likely to continue. A breakout above the recent high of 0.8698 could pave the way for a retest of the April peak at 0.8739, particularly if RSI climbs closer to 70.
However, a decisive break below 0.8623 would signal a weakening trend. In that case, the pair could target deeper retracement levels—first at the 32.8% Fibonacci level at 0.8551, followed by the 50-day and 100-day SMAs. A sustained drop below this region would shift focus toward the 61.8% Fibonacci retracement at 0.8435, signaling a potential trend reversal.
