Euro firms against British Pound on hopes of a Hormuz deal

• A reported US-Iran ceasefire that would reopen the Strait of Hormuz is easing energy-cost fears and lending the Euro a modest bid against the Pound.
• The Eurozone data slate is busy later this week, with German unemployment due.
• Reports say Iran moved its military doctrine onto a more offensive footing.

EUR/GBP is trading around 0.8570 on Wednesday, on the front foot as hopes of a de-escalation in the Gulf hand the Euro (EUR) a modest lift. The pair has broken above its 20- and 100-period moving averages, which sit bunched together near 0.8558 on the 4-hour chart, and is testing the session high in the 0.8574 area.

Russian agency RIA Novosti reported on Tuesday that Washington and Tehran had agreed to a ceasefire that would restore free navigation through the Strait of Hormuz, the route that carried about a fifth of the world's Oil and liquefied natural gas (LNG) before the conflict, with an announcement expected in the coming days. For the energy-importing Euro area, the prospect of calmer shipping lanes and softer fuel costs is a relative positive, and it is helping the single currency edge ahead of the Pound (GBP).

Reports that Iran has moved its military doctrine onto a more offensive footing, and that talks with Oman over managing the strait remain on-and-off, are keeping the move measured. Traders look set to wait for the deal to be confirmed before pricing it in fully.

German unemployment figures are due on Friday, with the jobless rate expected to hold at 6.4% in July, ahead of the Eurozone's August confidence surveys.

With the United Kingdom (UK) calendar quiet, Sterling is left to trade off the broader risk mood, leaving the initiative with the Euro for now. A solid set of Eurozone surveys, or formal confirmation of the Hormuz reopening, could see EUR/GBP extend toward the 0.8575 region.

Short-term technical analysis:

On the 4-hour chart, EUR/GBP trades at 0.8571, retaining a mild bullish bias as it holds above both the 20-period and 100-period Simple Moving Averages (SMAs) clustered around 0.8558. The Relative Strength Index (RSI) near 61 hints at firm but not overextended upside momentum, while immediate topside pressure emerges from the nearby horizontal resistance at 0.8574.

On the downside, initial support appears at the latest close around 0.8571, with a dense demand zone forming between the horizontal levels at 0.8565, 0.8562 and 0.8560, ahead of the SMA base near 0.8558. On the topside, a clear break above 0.8574 would open the way for further gains, keeping the short-term constructive tone intact as long as price stays over the underlying moving average cluster.

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