EUR/GBP Price Forecast: Technical setup neutral as pair trades between key moving averages
- EUR/GBP trades slightly firmer on Tuesday, as quiet market conditions keep the cross range-bound.
- Traders maintain a cautious stance with ECB and BoE meetings in focus.
- Technical structure stays constructive above the 100-day SMA at 0.8713, but the 0.8750-0.8755 resistance zone limits upside traction.
The Euro (EUR) holds steady against the British Pound (GBP) on Tuesday, with EUR/GBP oscillating within its familiar range as traders remain on the sidelines amid a lack of fresh catalysts, with attention gradually shifting toward next week’s monetary policy meetings from the European Central Bank (ECB) and the Bank of England (BoE).
At the time of writing, EUR/GBP is trading around 0.8738, edging modestly higher after hitting a daily low of 0.8720 earlier in the day.
From a technical perspective, the daily chart shows price action stabilising above the 100-day Simple Moving Average (SMA) near 0.8713, reinforcing a mild upward bias.
However, the 50-day SMA, which aligns with the former support zone now acting as resistance around 0.8750-0.8755, continues to cap immediate upside and keep the cross largely range-bound.
A decisive break above this barrier would help restore bullish momentum and pave the way for a move toward 0.8865, the year-to-date peak and the strongest level since April 2023.
On the downside, a daily close below the 100-day SMA would expose the next support at 0.8670, followed by the 0.8600 psychological handle.
Momentum indicators remain soft, with the Moving Average Convergence Divergence (MACD) holding below zero while its contracting negative histogram points to easing bearish pressure. The Relative Strength Index (RSI) is at 42, signalling subdued momentum in the near term.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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