CFD Trading Rate Euro vs Great Britain Pound (EURGBP)

• EUR/GBP remains under selling pressure around 0.8315 in Thursday’s early European session.
• The UK central bank is likely to cut the benchmark rate by 25 bps at its November meeting on Thursday. 
• German Industrial Production came in at -2.5% MoM in September vs. -1.0% expected. 

The EUR/GBP cross extends its downside to near 0.8315 on Tuesday during the early European session. The Bank of England (BoE) interest rate decision will be in the spotlight on Thursday. 

The BoE is widely expected to cut interest rates on Thursday, bringing the benchmark rate to 4.75% from 5.0%. Political developments will influence the central bank's decision on Thursday, particularly last week's Budget given by Chancellor Rachel Reeves. The UK officials stated that they would push inflation and interest rates higher in the short term, triggering more doubt about whether the UK central bank will cut interest rates again following its meeting in December.

The expectation that the BoE would cut rates less aggressively than the European Central Bank (ECB) could provide some support to the Pound Sterling (GBP) and cap the upside for the cross in the near term. 

The ECB has already reduced rates three times this year as inflation risks in the Eurozone ease faster than expected. The rising ECB rate cut bets exert some selling pressure on the shared currency. Money markets see the ECB cut rates by around 125 basis points (bps) over the next year.

Data released by Destatis on Thursday showed that Germany’s industrial sector activity declined by 2.5% MoM in September versus a rise of 2.6% (revised from 2.9%) in August, weaker than the estimation of 1.0% decline. The Euro remains weak in an immediate reaction to the downbeat Industrial Production data. 

• Technical indicators send signals of the bulls weakening, with the RSI in oversold territory and the MACD showing decreasing green bars.
• The 20-day SMA support is now gone.

Wednesday’s EUR/GBP market has been dominated by significant losses, extending a bearish trend that has lasted the past seven trading sessions. This downward momentum has pushed the pair below its 20-day Simple Moving Average (SMA) and down to its lowest point in over a week.

Technical indicators are presenting a nuanced outlook. The Relative Strength Index (RSI), which measures the strength or weakness of price movements, has dipped into negative territory and its downward trajectory indicates a rise in selling pressure. The RSI's current value of 45 places it in the negative zone. The Moving Average Convergence Divergence (MACD), a trend-following indicator, displays decreasing green histogram bars. This suggests that buying pressure is waning.

The EUR/GBP cross plunged and lost the 20-day Simple Moving Average (SMA), indicating a potential downward trend. This decline pushed the cross to its lowest point in over a week, further suggesting a bearish sentiment. Supports now line up at 0.8330, 0.8315 and 0.8300.

EUR/GBP daily chart

• EUR/GBP has sold-off back down to the lows of its short-term range. 
• It is probably in a sideways trend and is likely to encounter stubborn support at the range lows. 

EUR/GBP declines all the way back down to the base of its six-week range (red dashed line on chart) at roughly 0.8311; it is likely to encounter firm support at the level.

EUR/GBP 4-hour Chart 

The pair is probably in a short-term sideways trend and given the technical analysis principle that “the trend is your friend” the odds favor an extension of this range-bound price action. 

Therefore, if EUR/GBP stops selling off at the range floor and starts to bounce higher it would confirm that the sideways trend was extending. That said, price has not slowed its descent yet, is still pushing lower and showing no signs of a bounce. 

If the bearish behavior continues and EUR/GBP breaks decisively below the 0.8311 floor, it would suggest the medium and long-term downtrends were reasserting themselves, and the pair was likely to fall further. However, it should be noted these levels represent over two-year lows for the pair.

Nevertheless, a clean break below them, by a longer-than-average daily candlestick below the 0.8311 lows, or perhaps by three consecutive red candles, would confirm a decisive breakdown. Such a move would probably then lead to a sell-off to around the 0.8240 level, this being the 61.8% Fibonacci extension of the height of the range extrapolated lower. 

• EUR/GBP tumbles to near 0.8345 in Wednesday’s early European session.
• The BoE is expected to cut interest rates at its November meeting on Thursday. 
• Diminishing odds for larger ECB rate cuts might help limit the EUR’s losses. 

The EUR/GBP cross extends its decline to around 0.8345 during the early European session on Wednesday. The rising expectation that the Bank of England (BoE) will cut rates slowly supports the Pound Sterling (GBP) and weighs on the cross. The BoE interest rate decision will be in the spotlight on Thursday. 

The UK central bank is anticipated to reduce its interest rate from 5.0% to 4.75% at its Monetary Policy Committee meeting on Thursday. The markets believe the heightened UK government spending may be inflationary, triggering the BoE to slow the expected path of rate cuts. 

“Markets have already tempered expectations [and are] now forecasting two or three rate cuts in 2025, down from earlier projections of four or five,” said Daniela Sabin Hathorn, senior market analyst at Capital.com. “The BoE is now expected to cut rates less aggressively than the Fed and the ECB,” Hathorn added in a note.

The European Central Bank (ECB) has already reduced rates three times already this year as inflation risks in the Eurozone ease faster than expected. The central bank lowered the deposit rate by a further 25 basis points (bps) at its October meeting. The decision came after inflation in the euro area cooled to 1.8% in September, below the ECB’s 2% target.

Nonetheless, the stronger-than-expected Eurozone Gross Domestic Product (GDP) could trim the ECB rate cut expectation, which caps the downside for the shared currency. The ECB's President Christine Lagarde and Vice President Luis de Guindos are scheduled to speak later on Wednesday. Investors will take more cues from the speeches. Less dovish remarks could lift the EUR against the GBP for the time being. 

• The EUR/GBP cross faced rejection at the crucial 100-day SMA last week, signaling a potential shift in trend.
• The cross might sideways within a range defined by the 100-day SMA and the 20-day SMA providing support.

The EUR/GBP cross has been exhibiting a sideways trend in recent trading sessions, consolidating within a narrow range. This consolidation phase is likely to continue until a decisive breakout occurs in either direction, providing further guidance on the cross's future trajectory. On Tuesday de cross mildly declined towards the 0.8380 area.

The Relative Strength Index (RSI) is at 55 indicating that buying pressure is declining as is in the positive area and has a mildly declining slope. The Moving Average Convergence Divergence (MACD) is green and decreasing, also suggesting that bullish momentum is waning. 

Overall, the technical indicators suggest that the EUR/GBP cross is in a neutral phase, with both bullish and bearish forces vying for control. A breakout from the current range between the 20 and 100-day Simple Moving Average (SMA) will provide further clarity on the cross's future direction. With some signs of bearish forces emerging, the 20-day SMA at 0.8350 might be set to recieve a visit in the near term.

EUR/GBP daily chart

• EUR/GBP consolidates as traders opt to wait on the sidelines ahead of the BoE on Thursday.
• Bets that the BoE will cut rates slowly underpin the GBP and act as a headwind for the cross.
• Diminishing odds for more aggressive ECB rate cuts lend support to the Euro and spot prices.

The EUR/GBP cross struggles to gain any meaningful traction and oscillates in a narrow trading band below the 0.8400 round-figure mark through the first half of the European session on Tuesday. Investors seem reluctant to place aggressive directional bets and opt to wait on the sidelines ahead of the pivotal Bank of England (BoE) policy decision on Thursday.

The UK central bank is widely expected to focus on a longer-term picture of slowing inflation and vote to cut interest rates for the second time this year. That said, expectations that UK Finance Minister Rachel Reeves' first budget would boost inflation and cause the BoE to cut interest rates more slowly turn out to be a key factor acting as a headwind for the EUR/GBP cross. The downside, however, remains cushioned in the wake of bets for a less dovish European Central Bank (ECB). 

Data released last week showed that inflation in the Eurozone rose to 2% in October. Furthermore, the better-than-expected GDP growth figures from the Eurozone's largest economies suggest that the ECB will stick to a 25 basis points (bps) interest rate cut at its next policy meeting in December. This, in turn, continues to underpin the shared currency and fails to assist the EUR/GBP cross to build on last week's breakout momentum beyond the 50-day Simple Moving Average (SMA). 

Investors also prefer to wait on the sidelines amid the uncertainty surrounding the US presidential election and ahead of ECB President Christine Lagarde's speech on Wednesday. Hence, it will be prudent to wait for strong follow-through buying before positioning for an extension of the EUR/GBP pair's recent bounce from sub-0.8300 levels.

• The EUR/GBP currency pair continues to trade sideways between the 20 and 100-day SMA .
•  RSI indicates recovering buying pressure and the MACD is green.
• Sellers breathe, after last Friday’s sharp losses.

In Monday's session, the EUR/GBP pair rose by 0.20% to 0.8395. While the pair remains in a sideways trend, the bullish pressure has shown signs of softening in the last sessions. For the short term, there are signs of a side-ways trade period after last Friday;s 0.60% losses.

The Relative Strength Index (RSI) is currently at 55, indicating that buying pressure is gradually increasing. However, the RSI has recently declined sharply, suggesting that buying pressure is easing. The Moving Average Convergence Divergence (MACD) histogram is flat and green, indicating that buying pressure is steady.

The overall technical outlook for the EUR/GBP is neutral to slightly bullish. The pair is likely to continue trading within the 0.8350-0.8450 (20 and 100-day Simple Moving Averages) range in the near term. However, the recent softening of the bullish trend suggests that the pair may be due for a correction lower which could be triggered if the bulls fail to defend the 20-day SMA.

EUR/GBP daily chart

• EUR/GBP recovers from multi-year lows but then pulls back down. 
• Is the pair about to reverse trend higher or is it still overall bearish?

EUR/GBP gaps higher at the open on Monday and starts climbing again. The pair had been pulling back since the completion of a three-wave, zig-zag-shaped pattern last Thursday. This pattern has been drawn on the chart below with the waves labeled a,b and c. 

EUR/GBP 4-hour Chart 

In the very near-term the pair might fall to fill the open gap left after price jumped higher on Monday. Technical analysis theory argues that gaps have a greater tendency of being closed. 

The abc pattern could be either a correction of the overall downtrend or the start of a new short-term uptrend. 

If it is just a correction, the price will probably continue falling in line with the medium and longer-term downtrend, with a target at the 0.8311 multi-year lows. 

If price manages to break above the high of wave c, however, it will have formed a third higher high, thereby establishing a new sequence of rising peaks and troughs. This is a strong indicator of a new uptrend. Give the technical analysis principle that “the trend is your friend” the odds would then favor further upside to come. 

The steepness of the abc pattern strengthens the case of this being a reversal rather than a correction. 

A failure to pierce above the top of wave c would indicate the pair is probably not reversing.  

It would suggest EUR/GBP will probably remain trapped oscillating within the red and green dashed lines on the chart at 0.8311 and 0.8456 respectively. 

• EUR/GBP completes an abc move higher after bouncing from multi-year lows. 
• A break above the top of the pattern could be a sign of a reversal and birth of a new uptrend.

EUR/GBP pulls back after peaking in the 0.8440s. On Tuesday it bounced off key support (gray dashed line) at multi-year lows and surged over a penny higher. In the process it completed a three-wave, zig-zag-shaped pattern, with waves labeled a,b and c. 

EUR/GBP 4-hour Chart 

It is possible this pattern is just a common three-wave abc correction. If so, this could imply the correction is now probably finished, that price will roll over, and return to the base of the consolidation and the multi-year low. 

However, the speed and strength of the move higher witnessed over the last few days suggests EUR/GBP may not just be correcting, but rather that it could be starting a new short-term uptrend. 

The test of whether this is the case or not, will be to see whether price can now break above the top of wave c at 0.8448 (green resistance level on chart). If it can, it will have formed a third higher high and established a new sequence of rising peaks and troughs, heralding the start of a new uptrend. Give the technical analysis principle that “the trend is your friend” the odds would then favor further upside to come. 

If pierce cannot make a new higher high above wave c, it is possible EUR/GBP will decline again as it continues unfolding its sideways range-bound trend.

• EUR/GBP may appreciate as higher Eurozone inflation has bolstered chances of the ECB adopting a cautious approach to rate cuts.
• The ECB has emphasized that inflationary pressures remain high, driven mainly by wage growth.
• The UK’s Office for Business Responsibility has raised its 2024 inflation forecast to 2.5%, up from March estimates of 2.2%.

EUR/GBP inches lower after two days of gains, trading around 0.8430 during the early European hours on Friday. This downside of the EUR/GBP cross could be limited as unexpected increase in Eurozone inflation has bolstered expectations that the European Central Bank (ECB) will maintain a cautious approach to rate cuts, steering clear of significant reductions.

The preliminary Eurozone Harmonized Index of Consumer Prices increased to 2.0% year-over-year in October, up from the previous 1.7% reading and surpassing forecasts of 1.9%. The core inflation rate held steady at 2.7% year-over-year. This rise in inflation is supported by stronger-than-anticipated economic growth, with the Eurozone economy expanding by 0.4% quarter-on-quarter in Q3, twice the growth seen in Q2 and exceeding predictions of 0.2%.

The ECB has highlighted that inflationary pressures remain elevated, primarily due to wage growth. In its recent October meeting, the ECB reaffirmed its commitment to a "data-dependent and meeting-by-meeting" strategy for future policy decisions.

The Pound Sterling (GBP) lost ground since the UK Labour government’s first budget announced £40 billion in tax hikes aimed at reducing public finance gaps and bolstering public services, as reported by CNBC.

The UK’s Office for Business Responsibility (OCR) has revised its 2024 inflation forecast upward to 2.5%, from the previous estimate of 2.2% in March. This adjustment has also led traders to anticipate fewer interest rate cuts by the Bank of England (BoE).

• EUR/GBP bounces off key lows and rallies strongly. 
• Too soon to say whether the pair is reversing trend or correcting, however, upside is strong so far. 

EUR/GBP has bounced off key support (gray dashed line) at multi-year lows and risen over a percentage point to trade above 0.8400 on Thursday. 

EUR/GBP 4-hour Chart 

The pair has risen very steeply over the last two days and this could be a sign the short-term trend is reversing and turning higher. If so the bias will be to the upside given the technical analysis principle that “the trend is your friend”. It is too early to be sure this is the case however. 

It is also possible to characterize EUR/GBP as merely correcting back and forming a common three-wave abc correction in the process. This would imply price will roll over after wave c ic completed and possibly even fall back down to the 0.8300 lows. 

The speed and strength of the rally over the last 48 hours, however, suggests EUR/GBP may not just be forming an abc correction, but that it could be completely reversing trend and turning bullish. Ultimately, evidence is required to be confident of such a reversal.

The Relative Strength Index (RSI) momentum indicator entered the overbought zone (above 70) this period, however, we will not know whether it remains there until the current candle closes. At the moment that looks likely. 

If RSI closes above 70 then it will be a sign for long-holders not to add to their positions, since there is a material risk of the price pulling back.

• EUR/GBP loses ground despite a less-dovish sentiment surrounding the ECB following the robust Eurozone GDP data.
• Traders await Eurozone Harmonized Index of Consumer Prices (HICP) data on Thursday.
• UK budget includes £40 billion in tax increases aimed at reducing public finance deficits and enhancing funding for public services.

EUR/GBP trades slightly lower during early European hours on Thursday near 0.8360, following strong gains in the previous session. This downside may be limited, as the Euro could find support from investors scaling back expectations of a large rate cut by the European Central Bank (ECB) in December.

This sentiment shift regarding the ECB’s policy outlook comes after stronger-than-expected economic data from the Eurozone and Germany released on Wednesday. Investors will keep an eye on the Eurozone Harmonized Index of Consumer Prices (HICP) on Thursday.

According to preliminary estimates from Eurostat, the seasonally adjusted Eurozone Gross Domestic Product (GDP) expanded by 0.4% quarter-over-quarter in Q3, surpassing the expected 0.2% increase. Year-over-year, the Eurozone's GDP grew by 0.9%, above the forecasted 0.8% growth.

In Germany, GDP rose by 0.2% QoQ in Q3, recovering from a 0.3% decline in Q2 and exceeding expectations of a 0.1% contraction, based on preliminary data. Additionally, Germany’s Consumer Price Index (CPI) showed an annual inflation rate of 2.0% in October, a three-month high, up from 1.6% in September and above the projected 1.8%, according to preliminary estimates.

The EUR/GBP cross also gained support as the Pound Sterling (GBP) weakened following the UK Labour government’s first budget announcement on Wednesday. This budget includes £40 billion in tax hikes aimed at reducing public finance gaps and bolstering public services, as reported by CNBC. A major revenue source in the budget is a rise in National Insurance (NI) contributions, a tax on earnings paid by employers.

Furthermore, traders are likely watching an upcoming keynote address by Bank of England (BoE) Deputy Governor Sarah Breeden at a conference hosted by the Hong Kong Monetary Authority and Bank for International Settlements on the “Opportunities and Challenges of Emerging Technologies in the Financial Ecosystem.”

• EUR/GBP exhibits a volatile performance amid the announcement of UK Labour’s first budget announcement.
• The UK administration has announced significant spending plans for various sectors.
• The Euro performs strongly on upbeat Eurozone Q3 GDP growth and hot German inflation.

The EUR/GBP wobbles near an intraday high around 0.8350 in Wednesday’s New York session. The cross trades volatile amid the announcement of the United Kingdom (UK) Autumn Forecast Statement by Chancellor of the Exchequer Rachel Reeves.

In the first budget announcement under Labour’s administration, Reeves has announced tax hikes on inheritance wealth and private jet flights, and raise duties on various components such as air passengers, alcohol and tobacco.

The government has announced big-bang spending plans such as: 40% relief on business rates for retail and hospitality industries up to a cap retail, higher investment for affordable homes, set up of Electric Vehicles (EV) industry and 11 green hydrogen projects.

Meanwhile, the Office for Business Responsibility (OBR) has upwardly revised the Consumer Price Index (CPI) forecast to 2.5% in 2024, from 2.2% announced in March.

The cross performs strongly in North American trading hours due to upbeat Euro (EUR). The shared currency pair strengthened after the release of the Eurozone flash Gross Domestic Product (GDP) data, which showed that the economic growth was faster-than-expected in the third quarter of the year. The Eurozone economic output rose by 0.9% year-on-year, faster than estimates of 0.8% and 0.6% growth in the previous quarter.

Meanwhile, hotter-than-forecasted German inflation has also strengthened the Euro, a scenario that is unfavorable for European Central Bank (ECB) dovish bets. Annual German Harmonized Index of Consumer Prices (HICP) grew at a faster pace of 2.4% than estimates of 2.1% and the September reading of 1.8%.

• EUR/GBP appreciates as the British Pound faces challenges ahead of the UK’s Autumn Forecast Statement.
• UK Chancellor of the Exchequer, Rachel Reeves, plans to implement approximately £40 billion in fiscal measures, primarily through tax increases.
• Traders await the release of preliminary Gross Domestic Product (GDP) data from Germany and the Eurozone on Wednesday.

EUR/GBP recovers its recent losses from the previous session, trading near 0.8320 in the European session on Wednesday. This downward trend in the EUR/GBP cross could be attributed to a weaker Pound Sterling (GBP) ahead of the UK’s upcoming Autumn Forecast Statement. This will mark the first budget announcement by a Labor government in over 15 years.

Reuters cited government sources, UK Chancellor of the Exchequer, Rachel Reeves plans to implement approximately £40 billion ($52 billion) in fiscal measures, primarily through tax increases, to fulfill her commitment to fund day-to-day government expenses.

The Euro may face headwinds as the European Central Bank (ECB) is widely expected to lower its Deposit Facility Rate again. Current money market data suggests nearly a 50% probability of a 50 basis point rate cut in the December meeting.

Investors will pay close attention to preliminary Gross Domestic Product (GDP) data from Germany and the Eurozone, as well as Germany’s preliminary Harmonized Index of Consumer Prices (HICP) figures, all set for release on Wednesday.

In recent days, ECB policymakers have expressed mixed views on monetary policy. Pierre Wunsch, Governor of the National Bank of Belgium, indicated that there is no urgency to accelerate rate cuts and even suggested that a modest rate could be sustained. In contrast, Mario Centeno, Governor of the Bank of Portugal, supported the idea of a potential 50 basis point rate cut in December.

• EUR/GBP weakens to almost two-and-a-half year lows on Tuesday on diverging monetary policy expectations. 
• Interest rates are expected to fall more quickly in Europe than in the UK, weakening the Euro versus the Pound. 
• Wednesday promises to be a big day for the pair with Eurozone GDP data for Q3 and the UK Chancellor presenting the Budget.

EUR/GBP exchanges hands just above 0.8300 on Tuesday, down a quarter of a percent on the day and close to the two-and-a-half year lows of 0.8295 set on October 18. A break below these lows would be a considerable bearish development. 

EUR/GBP is falling as the Euro (EUR) depreciates against the Pound Sterling (GBP) due to diverging central bank monetary policy expectations. The European Central Bank (ECB) is foreseen as cutting interest rates lower than the Bank of England (BoE) in the remaining months of 2024 and this is pressuring the Single Currency – and EUR/GBP – lower. This is because currencies with relatively lower interest rates tend to depreciate because of capital outflows.

EUR/GBP Daily Chart

The market’s pricing of Interest Rate Swaps provides a method for predicting what central banks will do in the future, and these are showing “nearly 50% odds of the ECB” cutting interest rates by 50 basis points (bps) (0.50%) at the December meeting, according to Lallalit Srijandorn, Editor at FXStreet. This compares to the UK where, a Reuters poll of economists expect the BoE to cut its Bank Rate by only 25 bps (0.25%) on November 7. In addition, of those surveyed, a nearly-two-thirds majority expect the BoE to leave interest rates unchanged in December. 

Recent comments from ECB Governing Council members have on the whole emphasized the possibility of the central bank cutting rates more aggressively since inflation has declined more quickly amid softer-than-expected economic growth. 

Commentary somewhat softened so far this week, however, providing some relief to the Euro on Monday. The European Central Bank (ECB) Vice President Luis de Guindos said that the ECB has made significant progress in bringing down inflation but can’t declare victory just yet. Whilst he said “domestic inflation remains high” – implying interest rates should remain elevated – he also highlighted the risks to growth, which by implication could be remedied by lowering interest rates and easing the availability of credit.   

Prior to De Guindos, European Central Bank (ECB) policymaker Pierre Wunsch said on Monday that “it is premature to discuss December policy decision.” Further adding that he felt “no urgency in further accelerating easing of monetary policy,” and that the undershoot in September inflation data could be explained as due to lower energy prices from cheaper Oil. 

Wednesday could be a pivotal day for EUR/GBP due to the release of preliminary Eurozone Gross Domestic Product (GDP) data for Q3 which will help clarify the growth situation in the region, and the delivery of the UK Budget statement in the UK. 

Given the new Labor government’s highlighting of the 22 billion (GBP) black hole in the nation’s accounts left by the previous Conservative government, the UK Budget is likely to incorporate a mixture of higher taxes and moderate government spending. According to Capital Economics, even with higher taxes expected, UK consumers are not reacting by tightening their belts and growth is expected to continue at a “healthy clip”. This suggests Sterling will remain underpinned.

“Overall, there’s little evidence that the prospect of tax rises has caused households to become more cautious with their borrowing. While household borrowing and spending may be a bit softer after the scale of tax rises is revealed in tomorrow’s Budget, our central forecast is that the economy expanded in September and will grow by a decent 0.4% q/q or so in Q4,” says  Paul Dales, Chief UK Economist at Capital Economics. 

Eurozone GDP data, meanwhile, is expected to show a 0.8% rise in Q3 YoY, from 0.6% in Q2, and a 0.2% increase QoQ, the same as it did in the previous quarter.  An undershoot would weaken the Euro and see more losses for EUR/GBP, whilst an overshoot would strengthen the case for a more cautious approach to cutting interest rates reflected in Monday’s commentary and see the Euro, and EUR/GBP recover. 

• EUR/GBP strengthens to near 0.8340 in Tuesday’s early European session. 
• ECB’s Wunsch said it is premature to discuss December policy decision. 
• BoE is likely to cut its rate by a quarter-point in the November meeting to 4.75%, according to a Reuters poll. 

The EUR/GBP cross trades in positive territory around 0.8340 on Tuesday during the early European session. The comments from the European Central Bank (ECB) policymaker Pierre Wunsch lift the Euro (EUR) against the Pound Sterling (GBP). Investors await the preliminary Gross Domestic Product (GDP) data for the third quarter from Germany and the Eurozone, which are due on Wednesday. 

ECB officials are divided on the necessity of a large reduction. On Monday, the ECB policymaker and Belgian central bank chief Pierre Wunsch noted that there is no urgency for the central bank to cut interest rates quicker and it could even live with a small. The less dovish comments provide some support for the shared currency. Meanwhile, ECB Vice President Luis de Guindos said on Monday that the central bank has made significant progress in bringing down inflation but can’t declare victory yet. 

Nonetheless, money markets are still pricing in nearly 50% odds of the ECB rate reductions by half a percentage point in the December meeting. The GDP numbers on Wednesday could offer some hints about the health of the German and Eurozone economies. The weaker-than-expected outcome could increase the likelihood of the ECB rate cuts in December and might drag the EUR lower. 

On the other hand, the expectation that the Bank of England's (BoE) rate-cutting cycle might be slower than in the Eurozone could help limit the GBP’s losses. According to a Reuters poll, economists expect the BoE to cut its Bank Rate by a quarter-point on November 7 to 4.75%, but a near-two-thirds majority anticipates no move in December. 

• EUR/GBP gains some positive traction after comments from ECB’s Pierre Wunsch.
• Bets for more aggressive ECB rate cuts might keep a lid on any meaningful gains.
• Traders also prefer to wait for the German and Eurozone CPI reports later this week. 

The EUR/GBP cross attracts some buyers following an intraday dip to the 0.8315 region at the start of a new week and reverses a major part of Friday's modest decline. Spot prices climb to a fresh daily high during the first half of the European session and currently trade around the 0.8340 area, up just over 0.10% for the day. 

The shared currency gets a minor lift following comments from the European Central Bank (ECB) policymaker Pierre Wunsch, saying that a temporary and small undershoot of the inflation target due to energy price swings is acceptable. Wunsch added that it is premature to discuss the December policy decision and that there is no urgency in further accelerating the easing of monetary policy. This, in turn, is seen as a key factor offering some support to the EUR/GBP cross. 

Apart from this, the uptick could be attributed to some technical buying in the vicinity of the 0.8300 pivotal support, which has been acting as a strong base for spot prices since late September. Any meaningful upside, however, seems elusive in the wake of bets for more aggressive interest rate cuts by the ECB, bolstered by a fall in the Eurozone consumer inflation below the central bank's 2% target for the first time since June 2021 and sluggish economic growth.

The British Pound (GBP), on the other hand, might continue to draw support from expectations that the Bank of England's (BoE) rate-cutting cycle is more likely to be slower than in the Eurozone. This might further contribute to capping the upside for the EUR/GBP cross in the absence of any relevant economic data. Traders might also prefer to wait for this week's release of flash German and Eurozone CPI prints on Wednesday and Thursday, respectively.

• Pair trades sideways within a narrow range, indicating indecisive market sentiment.
• RSI suggests increasing selling pressure, while MACD signals weakening bullish momentum.
• The pair remains below the 20-day SMA, indicating a bearish bias in the short term

EUR/GBP continues to trade within a constricted range, with limited price movements in recent sessions. The pair currently trades near 0.8340 having faced resistance at the 20-day SMA, maintaining a neutral bias. 

Analyzing the technical indicators, the Relative Strength Index (RSI) has declined to 45, suggesting increasing selling pressure. The MACD, while still in positive territory, is decreasing, indicating weakening buying momentum. This confluence of signals points to a neutral to slightly bearish bias in the short term.

Support levels are seen at 0.8330, 0.8315, and 0.8300, while resistance levels stand at 0.8350, 0.8370, and 0.8400. In the near term, the pair is likely to continue trading within this range unless buyers manage to break above the 20-day SMA, thereby shifting the technical outlook more favorably.

EUR/GBP daily chart

UK Chancellor Reeves is walking a thin line as she seeks to find a balance between finding the funds to invest for growth while also maintaining the air of budgetary prudence, Rabobank’s FX analyst Jane Foley notes.

GBP is holding up well so far

“To avoid shocking gilt investors too much by the October 30 budget announcements, Reeves has already leaked various parts of her agenda. GBP is holding up well so far, in part because the BoE is less dovish than some other G10 central banks.”

“Meanwhile, a more dovish ECB is undermining the resilience of the EUR. Ÿ Despite the risks to GBP posed by a change in fiscal policy settings, our central view remains that EUR/GBP will continue to edge lower to the 0.8150 area on a 12-month view.”

“We will revise our USD forecasts in early November and see downside risk to our cable view.”