EUR/GBP stable amid disappointing Eurozone, UK economic indicators

• EUR/GBP holds steady around 0.8820 as Eurozone and UK activity data disappoint.
• Preliminary figures from the Eurozone and Germany point to further economic weakening.
• The Pound faces selling pressure after UK Retail Sales fall sharply and the Composite PMI drops.

EUR/GBP trades around 0.8820 on Friday at the time of writing, virtually unchanged on the day as investors digest a series of contrasting macroeconomic indicators from the Eurozone and the United Kingdom (UK). The pair remains confined to a narrow range, reflecting a lack of directional conviction despite significant economic releases.

In the Eurozone, the preliminary Purchasing Managers Index (PMI) data published earlier in the day indicate a renewed slowdown in activity. The HCOB Manufacturing PMI fell back into contraction territory at 49.7 in November from 50 in October, while markets had expected an improvement toward 50.2. Services activity rose slightly to 53.1 from 53 in the previous month, matching consensus. Composite PMI fell to 52.4, slightly below expectations of 52.5. In Germany, the deterioration is even more pronounced as Manufacturing PMI declines to 48.4 from 49.6, and the Services PMI drops sharply to 52.7 from 54.6, far below market forecasts of 53.9.

This weakening economic backdrop weighs on the Euro’s (EUR) ability to recover, especially as household sentiment shows no improvement. The European Commission’s Consumer Confidence Index released on Thursday remained unchanged at -14.2, versus expectations of a slight improvement to -14.0. Earlier in the day, Christine Lagarde, President of the European Central Bank (ECB), noted that Euro strength could help bring inflation down faster than anticipated, while reiterating that the institution stands ready to adjust its monetary policy if needed. Additional speeches from ECB officials Luis de Guindos, Joachim Nagel and José Luis Escrivá are expected later in the day, which could influence market expectations.

In the United Kingdom, pressure on the Pound Sterling (GBP) intensifies following another batch of disappointing data. Retail Sales fell by 1.1% MoM in October, against expectations for flat growth, while the Composite PMI dropped sharply to 50.5 from 52.2 in October. Weakness in the Services sector heavily drags overall activity, despite a positive surprise from Manufacturing, which returns to expansion at 50.2.

These developments further strengthen expectations of future policy easing from the Bank of England (BoE), as inflation cools and the labor market shows signs of fatigue. The Autumn Budget on November 26, during which Chancellor of the Exchequer Rachel Reeves is expected to raise certain taxes to fill a £22 billion fiscal gap, is now the next major catalyst for the British currency.

EUR/GBP Technical Analysis: Stuck in a consolidation triangle

EUR/GBP 4-hour chart. Source: FXStreet.

In the 4-hour chart, EUR/GBP trades at 0.8826, 11 pips above the day’s open, little changed on a daily basis. The 100-period Simple Moving Average (SMA) edges higher near 0.8806. Price holds above it, preserving a mild bullish bias. The Relative Strength Index (RSI) rises to 55, reinforcing improving momentum. A rising trend line underpins the move with support around 0.8800.

A descending trend line caps gains near 0.8829, with subsequent resistance at 0.8865. A clear break above the former would extend the rebound toward the latter, while failure to pierce the barrier could see consolidation resume back toward dynamic support.

(The technical analysis of this story was written with the help of an AI tool)