ECB rate hike gives Euro little to work with as Pound holds firm

• The European Central Bank raises rates by a quarter point, but the move was fully priced in and barely stirred the Euro.
• Lagarde leans hawkish on inflation risks yet sticks to a meeting-by-meeting line.
• Firmer UK data and rising British inflation expectations are keeping the Pound in the fight.

EUR/GBP is easing on Friday and slipping toward the 0.8580 area. The cross had pushed to the top of its recent range in the high 0.8590s before running out of steam.

The European Central Bank (ECB) delivered, as expected, a 25-basis-point (bps) rate hike. As a result, the rate on the main refinancing operations, the marginal lending facility and the deposit facility stood at 2.65%, 2.90% and 2.50%, respectively.

ECB President Christine Lagarde refrained from pre-committing to the next move, repeating that the central bank remains data-dependent and will decide meeting by meeting. She added that inflation expectations over shorter horizons remain elevated, highlighting the risks tied to mounting price pressure amid the conflict in the Middle East.

United Kingdom (UK) activity data came in on the stronger side, with monthly Gross Domestic Product (GDP), Industrial Production and Manufacturing Production all beating expectations. UK consumer inflation expectations have also picked up, and a public that expects higher prices tends to reinforce the case for the Bank of England (BoE) to stay restrictive.

Short-term technical analysis:

On the 4-hour chart, EUR/GBP trades at 0.8582, holding just above the 100-period Simple Moving Average (SMA) at 0.8576 but capped by a nearby resistance cluster. The 20-period SMA at 0.8587, together with horizontal barriers at 0.8584 and 0.8585, forms a tight ceiling that keeps the near-term bias mildly bearish while price remains trapped beneath it. The Relative Strength Index (RSI) around 43 tilts lower, hinting that upside attempts could continue to fade under this overhead supply.

On the topside, initial resistance is aligned at 0.8584 and 0.8585, with the 20-period SMA and an additional horizontal level reinforcing a stronger cap near 0.8587. On the downside, immediate support is located at the recent floor around 0.8578, ahead of the 100-period SMA backing the structure near 0.8576; a clear break below this band would expose a deeper corrective phase, whereas a sustained move above 0.8587 would be needed to relieve the current pressure.

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