CFD Trading Rate Euro vs Great Britain Pound (EURGBP)

• EUR/GBP struggles for a firm near-term direction as traders keenly await the ECB on Thursday. 
• The ECB is expected to lower interest rates again amid easing inflation and economic slowdown.
• Bets for an aggressive BoE policy easing undermine the GBP and act as a headwind for the cross. 

The EUR/GBP cross extends its sideways consolidative price move through the first half of the European session on Monday and remains confined in a familiar range held over the past week or so. Spot prices currently trade around the 0.8365 region, nearly unchanged for the day as traders opt to wait on the sidelines ahead of the key central bank event risk later this week. 

The European Central Bank (ECB) is scheduled to announce its policy decision on Thursday and is expected to cut interest rates again for the third time this easing cycle amid mounting concerns over sluggish growth. Furthermore, inflation in the Eurozone fell below the ECB's 2% target for the first time since 2021 and backs the case for further policy easing. This, in turn, undermines the shared currency and turns out to be a key factor acting as a headwind for the EUR/GBP cross. 

Meanwhile, the Bank of England (BoE) Governor Andrew Bailey recently hinted that the central bank could cut interest rates more aggressively if there's further good news on inflation. The comments fueled speculation that the BoE might be headed towards speeding up its rate-cutting cycle and hold back traders from placing bullish bets around the British Pound (GBP). This, to a larger extent, offsets the negative factor and offers some support to the EUR/GBP cross.

The aforementioned mixed fundamental backdrop supports prospects for an extension of the subdued range price action in the absence of any relevant market-moving economic releases, either from the Eurozone or the UK. Hence, it will be prudent to wait for a sustained move in either direction before positioning for a firm near-term trajectory.

• EUR/GBP slides as a growing number of analysts make calls that the ECB will cut interest rates at their meeting next week. 
• Lower borrowing costs are negative for the Euro because they reduce capital inflows. 
• Sterling stands firm following the release of robust macroeconomic data. 

EUR/GBP edges lower on Friday as traders sell the Euro (EUR) due to the increasing likelihood of the European Central Bank (ECB) making more aggressive interest rate cuts in the future. Lower interest rates are negative for a currency as they reduce foreign capital inflows. Recent price action has seen EUR/GBP steadily pull back almost three quarters of a pence from the October 3 high of 0.8434 to trade in the 0.8360s at the end of the trading week. 

EUR/GBP meets pressure from sellers as traders gear up for another rate cut by the ECB at its October 17 meeting. Since the last meeting inflation has fallen more rapidly than previously expected – with the headline rate down to 1.8% in September, the first time it has fallen below the ECB’s 2.0% target in over three years. Growth too is slowing, suggesting the Governing Council will want to implement another 25 bps cut (0.25%) cut to its main refinancing operations rate (currently at 3.65%) in order to help lending to the economy.  

“We expect the ECB to cut rates 25bp again on 17 October. Growth is even weaker than the ECB's downwardly revised September forecasts, inflation is coming back to target sooner than the end-25 staff forecast and there is little apparent opposition from the Governing Council to a further easing in October for risk management purposes,” said Mark Wall, Director at Deutsche Bank Securities. 

Following on from the 25 bps cut made in the last meeting, another cut would be significant because it would “signal a pivot into a faster easing cycle,” added Wall. 

Scandinavian lender Nordea Bank also sees the ECB cutting by 25 bps in October.

“The ECB is very likely to accelerate the pace of its rate cuts by cutting 25bp again at the October meeting. However, the central bank may not be ready to signal that it intends to cut rates at every meeting going forward,” says Jan von Gerich, Chief Analyst at Nordea. 

The Pound Sterling (GBP), meanwhile, made mild gains on Friday after the release of broadly positive data. Gross Domestic Product (GDP) growth in August rose by 0.2%, in line with expectations and above the 0.0% of July. The led to a dip in EUR/GBP as Sterling saw some strength.

UK Industrial Production, meanwhile, rose 0.5% in August, which was above the (revised-up) 0.7% decline of July and the 0.2% rise expected. It was a similar story with Manufacturing Production which rose by 1.1% – higher than both the previous and expected figures. 

The robust economic data indicates the UK economy is holding up well despite relatively high interest rates in the UK (5.0%). It suggests the Bank of England (BoE) will not be in a hurry to cut interest rates at the next meeting, giving the Pound an advantage over its peers which are mostly committed to cutting their borrowing costs. 

The Pound sold off sharply on October 3 after the Governor of the BoE Andrew Bailey said the bank might get more “activist” and “aggressive” about cutting interest rates. The Sterling stabilized on the next day after BoE’s Chief Economist Huw Pill was more cautious in his comments. The BoE’s next policy meeting is on November 7 with a balanced chance of a 25 bps cut being made. 

• EUR/GBP gains traction to near 0.8380 in Friday’s early Asian session, up 0.11% on the day. 
• The German HICP inflation remained steady at 1.8% YoY in September, as expected. 
• The UK GDP expanded 0.2% MoM in August, matched estimates. 

The EUR/GBP cross trades on a stronger note around 0.8380 on Friday during the early European trading hours. The Euro (EUR) remains firm after the release of German inflation data and UK growth numbers. Traders will shift their attention to the UK employment data next week. 

Data released by Destatis on Friday showed that the German Harmonized Index of Consumer Prices (HICP) rose 1.8% YoY in September, compared to the previous reading and the expectations of 1.8%. The German inflation data continues to support the Euro, while investors were digesting the ECB's cautious tone on economic growth. 

The meeting account published on Thursday showed that the ECB remains confident that inflation is on track to hit the 2% target. The ECB policymakers see the cut rates by 25 basis points (bps) in September as appropriate due to disinflation and a fragile recovery. 

The ECB signaled that any further policy easing would be gradual and data-dependent. The ECB is anticipated to cut the deposit rate to 3.5% next week. More than 90% of economists polled by Reuters expect a reduction next week, with a similar majority betting on a follow-up move in December.

On the UK’s front, the Office for National Statistics (ONS) showed on Friday that the UK economy grew by 0.2% over the month in August. The reading matched the market consensus of 0.2% growth in the reported period.

Meanwhile, further delay on rate cuts by the Bank of England (BoE) might cap the downside for the Pound Sterling (GBP) in the near term. The BoE chief economist Huw Pill warned against cutting the base rate “too far or too fast” last week. Investors expect the UK central bank to cut the rate by a total of 0.5% to 4.5% in two of its last three meetings before the end of the year.

• EUR/GBP finds interim support near 0.8350 after the release of the ECB Monetary Policy Meeting Accounts.
• The ECB is expected to cut its borrowing rates further by 50 bps in the remainder of the year.
• Investors await the UK monthly GDP and the factory data to project the next move in the Pound Sterling.

The EUR/GBP pair discovers temporary support near 0.8350 in Thursday’s early North American session. The cross finds buying interest after the release of the European Central Bank (ECB) Monetary Policy Meeting Accounts for the September meeting. The minutes showed that policymakers expect inflation in Eurozone to rise again in the latter part of the year.

ECB accounts also indicated that inflation is on track to return to the bank’s target of 2% but refrained from announcing a victory over it.

However, the outlook of the Euro (EUR) is expected to remain weak as a decline in the flash Eurozone Harmonized of Consumer Prices (HICP) data for September to 1.8% and deepening risks to economic growth have prompted expectations of more rate cuts. For the remaining year, traders expect the ECB to cut interest rates further by 50 basis points (bps), suggesting that the ECB will reduce its Deposit Facility Rate by 25 bps next week and again in December.

In the September meeting, officials noted a faster-than-projected slowdown in the wage growth. The board expects the wage growth to soften even faster in the next year. This would keep price pressures under control and prompt expectation of more interest rate cuts going ahead.

In the United Kingdom (UK), the Pound Sterling (GBP) will be influenced by the monthly Gross Domestic Product (GDP) and the factory data for August, which will be published on Friday. Economists expect the UK economy to have grown by 0.2% after remaining flat in July.

For the Bank of England’s (BoE) interest rate outlook, traders expect the bank to cut interest rates for once in any of the two policy meetings remaining this year by 25 bps.

• Overall, the EUR/GBP consolidates sideways with no clear trend.
• RSI suggests rising selling pressure, while MACD indicates declining buying pressure in the short term.
• Bulls failed to defend the 20-day SMA which wornsed the outlook

The EUR/GBP pair trades around 0.8380, consolidating sideways and displaying no clear trend. In addition, the cross lost the 20-day Simple Moving Average (SMA) which might a downwards leg.

The technical indicators present that the bulls are backing off. The Relative Strength Index (RSI) is at 46 in negative territory and declining, indicating rising selling pressure. The Moving Average Convergence Divergence (MACD) presents a decreasing green histogram, suggesting declining buying pressure.

Bullish pressure can prevail if the price can break through the resistance level of 0.8400 and firmly hold above the 20-day Simple Moving Average (SMA). If that happens, the EUR/GBP pair could rise to 0.8450 or even 0.8500. On the other hand, a decline below the support level of 0.8320 could lead to further declines below 0.8300.

EUR/GBP daily chart

• EUR/GBP declined 0.10% on Tuesday and remains in a range, but bullish bias intact.
• RSI, flat MACD support a balanced outlook.
• EUR/GBP should hold above 0.8380 to confirm bullish bias.

The EUR/GBP pair remains confined within a recent range and declined by 0.10% on Tuesday to 0.8380. However, the larger time frame bias remains bullish, as suggested by the technical indicators and the pair continues to side-ways trade after last week’s rally.

The Relative Strength Index (RSI) is near 50 and declining. This suggests that selling pressure is rising. The Moving Average Convergence Divergence (MACD) is flat in positive territory, suggesting that buying pressure is flat.

A bullish continuation could be expected if the price breaks through the resistance at 0.8400 which would secure the 20-day Simple Moving Average (SMA) , potentially paving the way for gains towards 0.8450 and 0.8500. Conversely, if the price drops beneath the 0.8320 support level, it may trigger further declines. Overall it all points out that the bullish momentum gained last week seems to be taking a breather but still, the bulls have same work to do.

EUR/GBP daily chart

• Technical indicators suggest that buying pressure is rising, supporting the bullish outlook.
• The pair needs to break above 0.8400 to confirm a bullish continuation.
• A consolidation above the 20-day SMA would also favor a promising outlook.

The EUR/GBP pair seems to be consolidating in a sideways range after last week’s sharp gains, and rose by 0.35% on Monday to 0.8395.

The daily Relative Strength Index (RSI) is currently rising near its middle point suggesting that buying pressure is rising. The Moving Average Convergence Divergence (MACD) is also green and rising, further suggesting that the tide is in favor of the bulls.

A break above the 0.8400 resistance level could trigger a bullish continuation and would open the door for further gains towards 0.8450 and 0.8500. A drop below the 0.8320 support level could lead to further declines. Above the 0.8380 line where the 20-day Simple Moving Average (SMA) converges, serves as a strong support which the bulls must hold to continue rising.

EUR/GBP daily chart

• EUR/GBP rises over a third of a percent on Monday as traders continue to discount comments from BoE’s Andrew Bailey. 
• The bank’s Governor said the BoE was going to get more “activist” about cutting interest rates. 
• Upside for the pair is limited, however, as data from the Eurozone reflects a cooling economy. 

EUR/GBP exchanges hands in the 0.8390s after gaining over a third of a percent on Monday as  the Pound Sterling (GBP) resumes its negative trend of recent days, triggered by remarks from the Governor of the Bank of England (BoE) Andrew Bailey. The pair’s gains are likely to be contained, however, by weak data out of the Eurozone on Monday, which showed consumers tightening their belts and German Factory Orders in decline, which, in turn, undermine the Euro (EUR). 

The Euro outperforms the Pound on Monday as markets continue to digest comments from BoE Governor Bailey last Thursday who said that the BoE was going to get more “activist” and “aggressive” about cutting interest rates. His words surprised traders as up until then the BoE had been seen as one of the major central banks least likely to cut interest rates in the near-term. Lower interest rates are negative for the Pound as they reduce foreign capital inflows, and as a consequence Sterling lost over 1.0% against the Euro on the day. 

On Friday, the BoE’s Chief Economist, Huw Pill, administered some antidote by arguing the BoE should follow a more cautious approach in cutting interest rates, and Sterling recovered a little strength. Upbeat House Price data from lender Halifax further underpins the Pound on Monday but is not enough to catalyze a rally. 

EUR/GBP, however, sees its upside capped as the Euro struggles to gain traction following the release of weak Eurozone Retail Sales data on Monday. The data showed sales rose by only 0.80% annually in August, undershooting the 1.0% expected. Nevertheless, this was higher than the 0.1% decline in July. 

The single currency is further hampered by concerns around German manufacturing and this was not helped by German Factory Orders data on Monday, which showed a decline of 5.8% on a seasonally adjusted basis in August. This was well below the 2.0% decline expected and the upwardly-revised 3.9% rise of the previous month. The data adds further veracity to the view that the Eurozone’s largest economy is sliding into a recession. 

Falling inflation data in the Eurozone, which fell below the European Central Bank’s (ECB) 2.0% target for the first time in over three years in September when headline inflation hit 1.8%, is further weighing on the Euro. This has increased the chances that the ECB will cut interest rates at its meeting next week. Lower interest rates are usually negative for a currency as they reduce foreign capital inflows. 

ECB Governing Council member François Villeroy de Galhau further encouraged speculation on this point overnight when he said that the ECB will “quite probably” cut interest rates at the next meeting. Villeroy added that the ECB has to pay attention to the risk of undershooting its 2.0% inflation target “due to a weak growth and a restrictive monetary policy for too long.” His comments “support market pricing for a total 150 bp of easing over the next 12 months” from the ECB according to analysts at Brown Brothers Harriman (BBH).  

• EUR/GBP has pulled back to key support after rallying sharply on Thursday. 
• The pair has probably changed trend but a break above the October 3 high would confirm a bullish reversal.

EUR/GBP pulls back down to the base of its multi-month range at 0.8380 after shooting higher on Thursday, October 3, as a result of comments made by the Governor of the Bank of England (BoE) Andrew Bailey.

The pair has probably reversed its prior downtrending bias and is now starting a new short-term uptrend, however, a break above the October 3 high of 0.8434 would provide confirmation of such a reversal, and a probable extension higher thereafter.  

EUR/GBP Daily Chart 

Assuming a bullish scenario, EUR/GBP will probably reach the key resistance level at the cluster of Moving Averages in the 0.8450s, as well as the high of the consolidation channel. The next target above that is the green 200-day Simple Moving Average (SMA) at 0.8510. 

The blue Moving Average Convergence Divergence (MACD) momentum indicator has crossed above its red signal line, further signaling a probable change in the trend.

It would require a break below 0.8311 and the October 1 lows to reconfirm bearish bets and suggest the medium-term bear trend was reasserting itself. Such a move would then be expected to fall to the next downside target at 0.8284 (Fibonacci 78.6% extrapolation of the August decline) followed by 0.8236 (100% extrapolation of the same decline).  

• EUR/GBP loses ground as lower inflation data in the Eurozone bolstered the likelihood of an ECB rate cut this month.
• Markets reflect a 95% probability of a 25 basis point rate cut by the European Central Bank in October.
• BoE DMP survey showed that one year ahead expected inflation by UK firms declined by an additional 0.1% in Q3.

EUR/GBP retraces its recent gains, trading around 0.8390 during the Asian session on Friday. This downside could be attributed to the lower inflation reading in the Eurozone increasing expectations of a rate cut by the European Central Bank (ECB) in October, which would mark the central bank's third reduction this year.

Earlier this week, the Harmonized Index of Consumer Prices dropped to 1.8% year-over-year in September, falling below the ECB’s 2% target and lowest since April 2021. Markets reflect a 95% probability of a 25 basis point rate cut this month.

However, the EUR/GBP cross gained ground following the dovish comments by Bank of England (BoE) Governor Andrew Bailey on Thursday. BoE Governor Bailey said the prospect of the central bank becoming a “bit more aggressive” in cutting interest rates as the development of inflation continued to be good. The Bank of England is widely expected to cut the policy rate by 25 bps at the November meeting.

The latest Bank of England Decision Maker Panel (DMP) survey, released on Thursday, indicated that "one-year ahead expected CPI inflation by UK firms declined by an additional 0.1% to 2.6% in the quarter to September." Expected year-ahead wage growth remained steady at 4.1% on a three-month moving average in September, while business uncertainty decreased over the same period.

• EUR/GBP is undergoing a short squeeze higher. 
• Upside will likely be capped at the cluster of Moving Averages situated in the 0.8450s.

EUR/GBP has suddenly reversed and shot higher on Thursday, gaining over 1.0% on the day so far. The explosive rally suggests a short squeeze is happening and the short-term trend has reversed “on a dime”. Bulls are now back in control.  

EUR/GBP Daily Chart 

EUR/GBP will probably go higher. The next key resistance level lies at the cluster of Moving Averages in 0.8450s. From there, a temporary pullback is likely given the speed of the ascent. Any corrections are likely to encounter support at around 0.8385, the July lows. 

One warning of the sudden reversal came from the fact that the Relative Strength Index (RSI) was converging bullishly with price (red dashed lines on chart). This signified a lack of downside momentum and increased chances of a pullback.  

Another warning sign was that EUR/GBP has already reached the conservative target for the bear move that began at the August 5 high, at 0.8322. This raised the possibility that the whole move might have completely run its course, which appears to be the case given today’s price action. 

• EUR/GBP gains traction to around 0.8380 in Thursday’s early European session, up 0.65% on the day. 
• BoE’s Bailey said the UK central bank may become a bit more aggressive on rate cuts. 
• Traders anticipate the ECB to cut the interest rates in October. 

The EUR/GBP cross rebounds to near 0.8380 during the early European session on Thursday. The Pound Sterling (GBP) loses ground after Bank of England (BoE) Governor Andrew Bailey’s speech. 

On Thursday, the BoE’s Bailey said that the UK central bank could become a “bit more aggressive” and “more activist” on rate reduction if there’s further progress on inflation. Bailey further stated that he will closely monitor the Middle East developments. The dovish remarks from Bailey exert some selling pressure on the GBP and create a tailwind for EUR/GBP. 

The BoE held interest rates at 5.0% in the September meeting after the first cut in borrowing rates in four years in August. However, investors expect another quarter-point reduction at its November meeting.

The European Central Bank (ECB) president Christine Lagarde reiterated last month that the central bank was “not pre-committing” to additional rates cut, emphasizing that the policymakers will stick to their “data-dependent. The recent Eurozone economic data earlier this week triggers the chance of the ECB rate cuts. The Eurozone inflation fell to 1.8% in September, below the 2% target.  

ECB Governing Council member Kazaks stated that “recent data clearly point in the direction of a cut, but leaned against “exaggerated” market expectations for easing. The markets have priced in nearly 95% odds of an October cut, up from a 25% chance after the September ECB decision.

Investors await the HCOB September Purchasing Managers’ Index (PMI) from Germany and the Eurozone, along with the Producer Price Index (PPI), which is due on Thursday. If the report shows a weaker-than-expected outcome, this could drag the shared currency lower against the GBP. 

• EUR/GBP ends its pullback and resumes its bearish tempo. 
• The RSI is converging bullishly with price, however, signifying a lack of bearish momentum accompanies the latest move.

EUR/GBP has finished pulling back and resumed its downtrend. It has broken below the 0.8317 September 24 low, confirming a lower low and extension towards the next target at 0.8287, the August 2022 low. 

It remains in a downtrend on a short and medium-term basis, and given the principle that “the trend is your friend” the odds favor an extension.

EUR/GBP Daily Chart 

That said, the Relative Strength Index (RSI) is converging bullishly with price when comparing the September 24 low with the lower low of October 1 (red dashed lines on chart). Although the price has declined, the RSI has not. This signifies a lack of downside momentum accompanies the latest sell-off. This increases the risks it could stall or even pullback. 

EUR/GBP has already reached the conservative target for the bear move that began at the August 5 high, at 0.8322. This is the 61.8% extrapolation of the August sell-off. Further downside beyond the target, therefore, could be characterized as “higher hanging fruit” and the whole downward move since the August 5 high may even have completely run its course.

• EUR/GBP received support following the speech made by the BoE policymaker Megan Greene.
• BoE’s Greene suggested that additional interest rate cuts are possible as prices are "moving in the right direction."
• The Euro may face challenges as the ECB has indicated that another cut could be on the horizon.

EUR/GBP extends its gains for the second successive session, trading around 0.8340 during Wednesday’s Asian hours. Traders are evaluating the impact of rising geopolitical tensions in the Middle East, which may have adversely affected the trade volumes of risk-sensitive currencies.

The Pound Sterling (GBP) may be facing downward pressure as Bank of England (BoE) policymaker Megan Greene indicated that further interest rate cuts are likely since prices are "moving in the right direction." However, Greene also cautioned that a consumption-driven recovery in the United Kingdom could spark a new wave of inflation, according to Bloomberg.

BoE policymaker Greene also stated that she believed the neutral interest rate had increased since the inflation shock. While most estimates suggest that the neutral rate for the Bank of England is around 3.5%, Greene did not provide a specific figure. The neutral rate refers to the level at which a central bank's policy neither stimulates nor constrains economic growth.

On the Euro's side, inflation in the Eurozone eased in September, falling below the European Central Bank's (ECB) target. The Harmonized Index of Consumer Prices (HICP) increased by 1.8% year-on-year in September, down from 2.2% in August. This marks the lowest rate since April 2021.

Despite the promising inflation rates for September, the Eurozone economy may still face challenges. The ECB reduced interest rates to 3.50% in September and has indicated that another cut could be on the horizon.

Traders await the upcoming Unemployment Rate for the European Union, as well as speeches from members of the ECB scheduled for Wednesday. On the UK’s dock, the Bank of England’s Monetary Policy Report Hearings will be closely monitored on Thursday.

• EUR/GBP has broken lower and extended its downtrend on Tuesday. 
• The RSI is showing a lack of bearish momentum accompanies the move and is converging with price.

EUR/GBP breaks lower after a brief pullback and continues its broader downtrend on Tuesday. 

EUR/GBP 4-hour Chart 

The pair breaks below the 0.8317 September 24 low, confirming an extension of the downtrend towards the next target at 0.8287, the August 2022 low. 

The Relative Strength Index (RSI) is converging bullishly with price when comparing the September 24 low and the current low (red dashed lines on chart). Although the current low is below that of September 24 the RSI is not. This non-confirmation signifies a lack of downside momentum accompanies the current sell-off and it might be a sign it will soon run out of steam. 

EUR/GBP has already reached the first downside target for the move that began at the August 5 high, at 0.8322. This is the 61.8% extrapolation of the August sell-off before the shallow channel formed in early September. Further downside beyond the target could be a sign, therefore, of overextension. 

• EUR/GBP flat lines near 0.8330 in Tuesday’s early European session. 
• ECB’s Lagarde signaled the October rate cut as inflation slows. 
• Less dovish stance of the BoE might underpin the Pound Sterling in the near term. 

The EUR/GBP cross trades on a flat note around 0.8330 on Tuesday during the early European session. Nonetheless, the rising speculation that the European Central Bank (ECB) will lower the interest rates in October might cap the upside for the Euro (EUR) against the Pound Sterling (GBP). 

The ECB President Christine Lagarde on Monday hinted about additional rate cuts at its next policy meeting in October amid increasing signs that inflation is beaten and that the economy is struggling. Lagarde added that the central bank is more confident that inflation is going to settle at its target after a series of recent data releases, and will take that into account when it next sets policy. The rising bets on ECB rate reduction are likely to weigh on the shared currency for the time being. 

Traders will closely watch the preliminary Eurozone inflation data for fresh impetus. The headline Harmonized Index of Consumer Prices (HICP) is expected to see an increase of 1.9% YoY in September, while the Core HICP is estimated to rise 2.9% YoY in the same period. 

On the other hand, the expectation that the easing cycle of the Bank of England (BoE) will be lower than other central banks from Group of Seven (G-7) nations provides some support to the GBP. Investors anticipate the BoE to cut interest rates one more time by 25 bps in the remainder of this year. 

• EUR/GBP pauses after temporarily bottoming and correcting higher. 
• RSI momentum has exited oversold indicating a possible reversal higher, although the trend remains bearish overall. 

EUR/GBP pauses after correcting back from the bottom the pair made on September 24. 

Despite the pullback over recent days, the pair remains in a short and medium-term downtrend and given it is a principle of technical analysis that “the trend is your friend” the odds continue to favor bears. 

EUR/GBP Daily Chart 

More broadly, EUR/GBP has now reached the first downside target for the move that began at the August 5 high suggesting an easing in bearish pressure. The target is the 61.8% extrapolation of the initial move down during August before the shallow channel higher that formed in early September. It is even possible this could indicate the end point of its decline, although that is not confirmed.

A break below the 0.8317 September 24 low, however, would reconfirm an extension of the downtrend towards the next target at 0.8287, the August 2022 low. 

The Relative Strength Index (RSI) has exited oversold after the September 24 bounce and this could indicate the risk that a stronger correction may as yet unfold higher. Such a move would be confirmed by a break above 0.8372, the September 25 high. 

• EUR/GBP depreciates due to rising odds for the ECB’s interest rate cut in October.
• UK GDP rose by 0.5% QoQ in Q2, slightly below the expected and previous increase of 0.6%.
• The Pound Sterling is buoyed by expectations that the BoE will likely take a slower approach to rate cuts.

EUR/GBP retraces its recent gains from the previous session, trading around 0.8340 during the Asian hours on Monday. The currency cross remians tepid following the release of the Gross Domestic Product (GDP) data for the second quater from the United Kingdom (UK).

The UK Gross Domestic Product (GDP) grew by 0.5% quarter-over-quarter in the second quarter, slightly below the expected and previous increase of 0.6%. On an annual basis, GDP rose by 0.7%, also falling short of the forecasted and prior growth rate of 0.9%.

The EUR/GBP cross recieved downward pressure from the increasing odds of the European Central Bank (ECB) implementing another interest rate cut in October. Traders would likely observe a slew of economic releases from Germany scheduled to be released later in the day, including preliminary Consumer Price Index (CPI) data for September.

Additionally, lower-than-expected inflation in France and Spain has reinforced the likelihood of the third cut in the ECB's ongoing policy-easing cycle, which began in June. The ECB resumed cutting rates in September after holding them steady in July.

France's inflation grew by 1.5% year-over-year in September, significantly below the estimated 1.9% and down from the previous release of 2.2%. On a monthly basis, price pressures deflated at a sharp rate of 1.2%, exceeding expectations of a 0.8% decline. In Spain, the annual Harmonized Index of Consumer Prices (HICP) increased by 1.7% in September, lower than the forecasted 1.9% and a drop from August’s 2.4%. Month-on-month, the HICP fell by 0.1%, contrary to expectations for no change.

• The EUR/GBP pair traded sideways on Friday, clearing daily gains and stabilizing at 0.8335.
• The RSI and MACD suggest that selling pressure is steady but continues flashing oversold conditions.
• The pair seems to be consolidating Wednesday’s sharp downward movements.

The EUR/GBP has been in a steady decline over the past trading days and bears stepped out to take a breather. On Friday, the cross initially jumped to 0.8350 and then stabilized at 0.8330 which gives more arguments that the buyers struggle. 

The Relative Strength Index (RSI) is in the near oversold area, suggesting that selling pressure is intense while the Moving Average Convergence Divergence (MACD) histogram is red and flat, which supports the case for consolidation in the near tear. 

The EUR/GBP pair appears to face near-term downward pressure, with bears currently dominating the market. A drop below the 0.8300 support level could trigger further declines. However, oversold signals from technical indicators suggest the possibility of an upward correction. For the bulls to regain control, a break above the 0.8400 resistance level would be necessary.

EUR/GBP daily chart