CFD Trading Rate Euro vs Great Britain Pound (EURGBP)

• EUR/GBP stays pressured at two-year lows on speculation the ECB could slash interest rates before year-end. 
• Lower interest rates would reduce foreign capital inflows, weighing on the Euro. 
• The Pound holds its ground despite weak PMI data and mildly dovish comments from BoE Governor Bailey.  

EUR/GBP trades at two-year lows in the 0.8320s on Thursday, having fallen a quarter of a percent on the day mainly due to a softer Euro (EUR). The Single Currency is falling as a result of increasing market speculation that the European Central Bank (ECB) will have to cut interest rates more aggressively – and to a lower base – than previously expected, to avert a hard landing for the Eurozone economy. 

The Pound Sterling (GBP), meanwhile, remains stable due to the relatively high 5.00% bank rate of  the Bank of England (BoE) which now stands out as one of the highest in the G10, and acts as a magnet to capital. In addition, the BoE is not expected to cut interest rates at the same pace as most other leading central banks, suggesting this could favor the Pound into the end of 2024. 

EUR/GBP declines as markets revise outlook for Eurozone

EUR/GBP is losing ground on Thursday and lies at multi-year lows as the Euro weakens against the Pound Sterling. 

The catalyst for this weakness stems from a surprise drop in Eurozone economic data, in particular inflation. Headline inflation in the Euro Area was revised down to 1.7% in September from its 1.8% preliminary estimate, and fell below the ECB’s 2.0% target for the first time in over three years, according to recent data from Eurostat. The surprise fall provided the catalyst for speculation the bank might need to cut interest rates more aggressively than previously expected. 

A Reuter’s story on Wednesday added fuel to the fire after it reported that the ECB was considering cutting interest rates to below the “neutral” rate. The neutral rate, also known as the “equilibrium level” of interest rates, is a theoretical level at which inflation should remain unchanged. The story added to speculation the ECB was sharpening its sword and led investors to sell the Euro. 

EUR/GBP Daily Chart

“Rates are falling significantly as markets are pricing a higher probability of the ECB going for a 50 bps rate cut in December,” said Andres Larsson, Senior FX Analyst at Nordea Bank, adding,  “..and a higher probability of the ECB eventually cutting rates to below neutral,”

According to Larsson, the market is pricing in “-35.6bp for the December ECB meeting and -32.4bp for the ECB meeting on 25 January.” This is substantially higher than a few weeks ago. 

Eurozone data out on Thursday failed to quell speculation. Mixed preliminary October PMIs revealed Manufacturing activity rising but still in contraction territory (below 50) at 45.9 vs. 45.1 expected. The Services PMI dipped to 51.2 vs. 51.5 expected and 51.4 in September. 

“Today’s PMIs were more or less in line with expectations, although the employment component dropped below 50, pointing to the risk of rising unemployment ahead,” said Larsson. 

Employment and wages could be a key determining factor for whether the ECB decides to go for a “Christmas slasher” or not. 

The ECB’s Chief Economist Philip Lane has said that wage inflation is likely to stay elevated in the second half of 2024 and contribute to higher broad inflation during the period before falling in 2025. 

According to Q2 Wage Growth data, Eurozone wages rose 4.5% which, though lower than the 5.2% in the previous quarter, remained high. There is still no data for Q3, however, but the Eurozone Average Monthly Wage continues to rise quite strongly, reaching EUR 2,180 in September. 

EUR/GBP at historic lows as Pound stands firm despite weak data

Sterling, meanwhile, remains firm despite weaker-than-expected UK PMI data for October.  This showed Manufacturing PMI falling to 50.3 vs. 51.5 expected and actual in September, and Services PMI at 51.8 vs. 52.4 expected and actual in September. The data could limit gains for the EUR/GBP pair.

“The weak PMI print along with the sharp slowdown in inflation raise the likelihood the BoE dials up its easing cycle, which can further curtail GBP upside momentum on the crosses,” said Elias Haddad, Senior Markets Strategist at Brown Brothers Harriman (BBH). 

The Consortium of British Industry (CBI) October distributive trades survey was also softer than expected. CBI Total orders came in at -27 vs. -28 expected while selling prices came in at 0 vs. 9 expected and 8 in September. “Most importantly, its quarterly measure of business optimism came in at -24 vs. -5 expected and -9 in July and is the lowest since October 2022,” said Haddad. 

In a recent speech, BoE Governor Andrew Bailey struck a mildly dovish chord after saying that “disinflation is happening I think faster than we expected it to, but we have still genuine question marks about whether there have been some structural changes in the economy.”  

At the same time Bailey did not reiterate the need for a more “activist” and “aggressive” stance on cutting interest rates as he had done in a previous speech. Markets took the view that this meant Bailey acknowledged he had overstepped the mark in the previous comments and that he was trying to steer the ship back to a more “cautious” approach. As such, Sterling held its ground.

• EUR/GBP holds losses following the release of Purchasing Managers Index data from the Eurozone and Germany.
• The HCOB Eurozone PMI Composite improved to 49.7 in October, against the previous 49.6 reading.
• Traders will likely observe the UK Purchasing Managers Index scheduled to be released later in the day.

EUR/GBP retraces its recent gains registered in the previous session, trading around 0.8320 during the European hours on Thursday. The Euro remains tepid against the Pound Sterling (GBP) following the HCOB Purchasing Managers Index (PMI) data from the Eurozone and Germany.

The HCOB Eurozone PMI Composite edged up to 49.7 in October as expected, slightly surpassing September's reading of 49.6, marking a two-month high. In contrast, the Services PMI dipped to 51.2 in October, down from 51.4 in September and falling short of the forecasted 51.6, hitting its lowest level in eight months. Meanwhile, the Manufacturing PMI increased to 45.9 from 45.0 prior, outperforming the anticipated 45.1 and reaching a five-month high.

Moreover, the HCOB Preliminary German Composite Output Index increased to 48.4 in October, up from 47.5 in September, marking its highest level in two months. The Manufacturing PMI climbed to 42.6, surpassing September's 40.6 and beating the forecast of 40.5. Meanwhile, the Services PMI rebounded to 51.4 from 50.6 prior, exceeding market expectations of 50.5 and hitting a three-month high.

During a discussion at the Institute of International Finance's annual membership meeting in Washington, D.C., on Wednesday, Bank of England Governor Andrew Bailey stated that inflation is currently below target due to annual base effects. Bailey noted that the high savings rate indicates consumer caution and added that pension funds should not be required to make compulsory allocations to UK assets.

The British Pound gains ground ahead of the release of the Purchasing Managers Index data from the United Kingdom (UK), scheduled for later in the day. Traders are also expected to pay attention to a speech by Bank of England (BoE) Monetary Policy Committee member Catherine Mann at a panel discussion during the Reinventing Bretton Woods Global Macro Economy event in Washington, D.C. Additionally, the focus will shift to BoE Governor Andrew Bailey's lecture at the Mike Gill Memorial hosted by the CFTC.

• EUR/GBP remains range-bound, displaying a sideways trend since Monday.
• Buying pressure has shown signs of recovery, but momentum remains weak.
• With the pair below the 20-day SMA, the short-term outlook is negative.

The EUR/GBP pair continues to consolidate its position, experiencing a mild uptick in Wednesday's session to 0.8330. This movement, however, has not broken the pair's recent trading range, which remains between 0.8310 and 0.8340.

The Relative Strength Index (RSI) indicates some recovery in buying pressure, rising to 43, but it remains still far from 50. The Moving Average Convergence Divergence (MACD) exhibits flat conditions, with the histogram in the negative zone showing no significant selling pressure.

Despite the mixed signals from technical indicators, the outlook for EUR/GBP remains overall negative for the short term. Should buying pressure fail to materialize, the pair could return to support at 0.8300. A break below this level could trigger further declines. Conversely, a move above 0.8340 could indicate a shift towards recovery.

EUR/GBP daily chart

• EUR/GBP has fallen to a key support level as it drills ever lower. 
• The pair is in an overall downtrend supporting more downside, however, bearish momentum remains tepid. 

EUR/GBP has fallen to a key support line at the level of the October 1 and 18 lows, in a zone between 0.8295 - 0.8310. It is currently bouncing although the trajectory of the short, medium and long-term trends is probably still bearish. Given the technical analysis principle that “the trend is your friend” this suggests the odds favor more downside. A break below the October support floor, therefore, remains a distinct possibility.  

EUR/GBP 4-hour Chart

If EUR/GBP manages to break below the 0.8295 level (October 18 low) it will probably confirm a decisive break below the aforementioned support. This, in turn, would likely see prices fall further, with the next potential downside target at the 0.8250 round number and then the lower channel line around 0.8220. 

The Relative Strength Index (RSI) momentum indicator is relatively elevated compared to the oversold levels it reached during the early-October lows. This suggests a lack of downside momentum which might be a sign further weakness will be limited. 

In addition, the pair is at historic lows, and further losses would be well below the pair’s long-term average. 

• EUR/GBP faces challenges as traders expect the ECB to deliver another rate cut in December.
• ECB policymakers have started discussing whether interest rates may need to fall below the neutral level.
• The BoE may deliver more rate cuts in November and December.

EUR/GBP remains subdued near 0.8310 during European trading hours on Wednesday, following losses in the previous session. The Euro is facing pressure as money markets have raised their expectations for further European Central Bank (ECB) rate cuts. This shift comes after improvements in inflation control but growing concerns about the Eurozone’s economic outlook.

The ECB has already cut its Deposit Facility Rate three times this year, with another reduction widely expected at the December meeting. Remarks from ECB President Christine Lagarde were seen as indicating a weaker economic outlook, prompting markets to anticipate a 25-basis point cut at each meeting through mid-2025.

According to sources familiar with the discussions, Reuters reported on Wednesday that European Central Bank (ECB) policymakers have begun debating whether interest rates will need to drop below the neutral level during the current easing cycle. One source noted, "I think neutral is not enough," implying that the ECB may aim for significantly lower rates in the coming months.

The Pound Sterling (GBP) encountered challenges following declining consumer and producer inflation rates, along with weak labor market data in the United Kingdom (UK). These conditions are driving expectations that the Bank of England (BoE) might introduce a 25 basis point rate cut in November, followed by another in December.

On Tuesday, BoE Governor Andrew Bailey emphasized the need for the UK central bank to strengthen its oversight of the less transparent non-banking sector. Speaking at a Bloomberg event in New York, Bailey remarked, "We are nearing a point where we must shift focus from rule-making to surveillance" to better monitor financial activities outside traditional banking.

• EUR/GBP remains range-bound, consolidating recent losses as buying pressure stalls.
• Sellers take the foot off the gas after last Thursday’s losses
• RSI indicates recovering buying pressure, while MACD shows flat conditions.

EUR/GBP daily chart

• EUR/GBP could face challenges due to dovish sentiment surrounding the ECB.
• Germany's PPI fell by 1.4% YoY in September, extending the decline from a previous 0.8% drop.
• Lower inflation prices raise the odds of the BoE implementing a total rate cut of 50 basis points by 2024.

EUR/GBP holds its position after the release of Germany's Producer Price Index (PPI), trading around 0.8330 during the early European hours on Monday. Producer prices fell by 1.4% year-on-year in September, extending the decline from a 0.8% drop in the previous two months. On a monthly basis, PPI decreased by 0.5%, marking the first decline since February. This drop exceeded expectations of a 0.2% fall and swinging from a 0.2% increase in August.

The Euro faced challenges as the European Central Bank (ECB) decided to cut its interest rates by 25 basis points last week. This could be attributed to a significant drop in inflation, which fell to 1.7% in September, now below the ECB's 2% target.

Additionally, Rabobank's research suggests that the market is interpreting recent comments from European Central Bank (ECB) officials as an indication that they are increasingly comfortable with the Eurozone's inflation outlook. This has fueled speculation about a possible faster pace of ECB easing, including the potential for a larger 50-basis-point interest rate cut.

Declines in both the Consumer Price Index (CPI) and Producer Price Index (PPI) inflation figures, along with weak labor market data in the United Kingdom (UK), are raising expectations that the Bank of England (BoE) may implement a 25 basis point (bps) interest rate cut in November, followed by another quarter-point cut in December. This could weigh on the Pound Sterling (GBP) and support the EUR/GBP cross.

• EUR/GBP attempts to recover from the recent pullback to lows since April 2022.
• RSI indicates buying pressure is recovering, while MACD shows flat buying pressure.
• As long as the cross remains below the 20-day SMA, the short-term outlook will be negative.

In Friday's session the EUR/GBP mildly rose to 0.8330 after falling to multi-year lows around 0.8300.

The Relative Strength Index (RSI) is currently at 44, suggesting that buying pressure is recovering. The RSI is in the negative area, but the slope is rising, indicating that buying pressure may be gaining strength. The Moving Average Convergence Divergence (MACD) is suggesting that buying pressure is flat. The MACD histogram is green and flat, indicating that buying pressure is not strong, but it may be starting to increase. That being said, the short-term bias remains bearish.

EUR/GBP daily chart

Despite recovering, buying traction is weak, and the pair might retest the 0.8300 support. In case of being rejected once again it might trigger an upwards consolidation with the 20-day Simple Moving Average (SMA) 0.8350 being the nearest resistance.

• EUR/GBP falls to a new low for 2024 on Friday after Sterling strengthens following higher-than-expected UK Retail Sales. 
• The Euro remains weak after the ECB cuts interest rates at two meetings in a row, accelerating its easing cycle. 
• Analysts think diverging monetary policies could push EUR/GBP even lower. 

EUR/GBP declines to fresh year-to-date lows of 0.8295 on Friday as the Pound Sterling (GBP) appreciates against the Euro (EUR) following the release of data showing British shoppers spending extravagantly in September. 

The lofty data suggests the Bank of England (BoE) will not be in such a hurry to lower interest rates in coming months. Given the BoE’s bank rate stands at 5.00% (one of the highest amongst western central banks) it is likely to continue to attract foreign capital inflows, and, in turn, demand for Sterling. 

EUR/GBP Daily Chart 

The Euro, meanwhile, remains vulnerable on Friday, on the day after the European Central Bank’s (ECB) decision to cut its interest rates by 25 basis point (bps) (0.25%) bringing the key deposit facility rate down to 3.25%. Although the move was widely telegraphed, it represents a significant turning point in the ECB’s easing cycle. By cutting rates at two consecutive meetings the ECB has signaled a speeding up of its easing cycle, according to analysts, which suggests more frequent cuts ahead. Further, the decision was accompanied by a mildly dovish statement and question-and-answer session by ECB President Christine Lagarde. 

“Lagarde confirmed the decision to cut 25 bp yesterday was unanimous and highlighted there was more downside than upside risks to inflation,” said a note by Brown Brothers Harriman (BBH). “Market is now pricing in almost 175 bps of ECB rate cuts over the next twelve months that would see the policy rate bottom near 1.50% vs. 2.00% earlier this week,” it went on. 

On Friday, the ECB officials who spoke adopted an unambiguously dovish stance, adding fuel to the flames left by the meeting. ECB member and Banque de France Président Francois Villeroy de Galhau said the direction was clear in his eyes, “we should continue to reduce the restrictive character of our monetary policy in an appropriate manner.” Meanwhile, ECB Governing Council member Boštjan Vasle noted that everything pointed to the process of disinflation being more robust. 

EUR/GBP is at risk of extending its downtrend after the UK Retail Sales data, according to BBH. The data surprised to the upside: Retail Sales rose 0.3% MoM, beating expectations of a 0.3% decline, and up on the 0.1% rise of the previous month, and this means the policy paths of the two central banks are diverging sharply.

"GBP firmed up briefly after stronger U.K. retail sales activity reinforced the case for a cautious BOE easing cycle,” said Elias Hadid, Senior Markets Strategist at BBH, “Bottom line: the relative monetary policy trend between the ECB and BOE still favors a lower EUR/GBP,” he concluded. 

Not all economists are as confident UK interest rates will remain elevated – at least in the long-term. Alex Kerr, UK Economist at Capital Economics, disagrees with the market about the trajectory of UK rates, saying “We still think the Bank of England will reduce interest rates from 5.00% now to 3.00% in early 2026, rather than to 3.75% as anticipated by investors. But if the Chancellor were to raise investment by more than we expect,”  he adds, “rates may not fall quite as fast.”

• EUR/GBP softens to near 0.8305 in Friday’s early European session, down 0.23% on the day. 
• The UK Retail Sales rose 0.3% MoM in September vs. -0.3% expected. 
• The dovish remarks of the ECB weigh on the Euro against the GBP. 

The EUR/GBP cross loses traction to around 0.8305 on Friday during the early European trading hours. The Pound Sterling (GBP) strengthens after the release of UK Retail Sales data for September. Later on Friday, the Eurozone Current Account for August will be published. 

Data released by the Office for National Statistics on Friday showed that UK Retail Sales increased 0.3% MoM in September from a rise of 1.0% in August. This figure came in stronger than the estimations of a decline of 0.3%. On an annual basis, Retail Sales in the UK climbed 3.9% in September versus  2.3% (revised from 2.5%) prior, above the consensus of 3.2%. 

The GBP attracts some buyers in an immediate reaction to the encouraging UK Retail Sales and drags the cross lower to the lowest level since April 2022. However, the rising expectation that the Bank of England (BoE) will lower borrowing costs by 25 basis points (bps) at its upcoming meeting in November and December after a surprise fall in the UK Consumer Price Index (CPI) inflation might cap the GBP’s upside. 

On the other hand, the Euro (EUR) remains under selling pressure after the European Central Bank (ECB) decided to cut the deposit rate by a further 25 bps at its October meeting as inflation in the Eurozone eased to 1.8% in September, below the ECB’s 2% target. 

"We believe that downside risks to growth in a context of easing inflationary pressure will lead to more rate cuts starting in December and continuing in 2025 until interest rates are back around a neutral level, that the ECB itself estimates around 2%," noted Gianluigi Mandruzzato, a senior economist at EFG Asset Management. 
 

• EUR/GBP got rejected once again by the 20-day SMA.
• RSI suggests selling pressure is rising, while MACD indicates buying pressure is declining.
• Movements below the 0.8400 threshold might trigger movements towards 0.8300.

In Thursday's session the EUR/GBP declined by 0.30% to 0.8330 after the cross surged and attempted to recover the 20-day SMA on Wednesday but got rejected and resumed its downwards paths.

The Relative Strength Index (RSI) is currently at 40, in negative area and on a declining slope, indicating that selling pressure is rising while the Moving Average Convergence Divergence (MACD) suggests buying pressure is declining. 

In case the cross fails to recover the 20-day SMA around 0.8350 support levels are at 0.8315, and 0.8300, while key resistance levels at 0.8380, 0.8400, and 0.8420.

EUR/GBP daily chart

• EUR/GBP sees more downside after the ECB cut key borrowing rates by 25 bps.
• This is the second straight interest rate cut by the ECB as Eurozone inflation cools down.
• Soft UK inflation data has prompted BoE dovish bets.

The EUR/GBP pair remains fragile after the European Central Bank (ECB) policy meeting in which the central bank cut its Rate on Deposit Facility by 25 basis points (bps) to 3.25%. The ECB reduced its key borrowing rates for the second straight time.

The central bank was already expected to cut its key borrowing rates as recent commentaries from officials indicated that they more worried about stagnation in economic growth than taming price pressures in the Eurozone.

The central bank has also cut the Main Refinancing Operations Rate by 25 bps to 3.4%. Market participants expect the ECB to reduce its borrowing rates further in its upcoming monetary policy in December as the Eurozone economic outlook has worsened due to growing expectations that former US President Donald Trump will win presidential elections, which are scheduled for November 5. Tariffs on imports are expected to rise in Trump’s administration, which will weigh on exports from European and Asian economies.

Meanwhile, the Pound Sterling (GBP) gains ground on Thursday after a sharp sell-off on Wednesday. The GBP dived after the release of the United Kingdom (UK) Consumer Price Index (CPI) report for September, which showed a slowdown in price pressures.

The service inflation, a closely watched indication by Bank of England (BoE) policymakers, decelerated to 4.8%, the lowest level since May 2022. Soft inflation data has prompted market expectations that the BoE could cut interest rates in each of the two policy meetings remaining this year, which are scheduled in November and December. Before the inflation data, traders were pricing only one interest rate cut in either of the two policy meetings.

• EUR/GBP softens to around 0.8355 in Thursday’s early European session. 
• The ECB is widely anticipated to reduce interest rates by 25 bps at its upcoming meeting on Thursday. 
• Slowing inflation in the UK has boosted the BOE cut bets. 

The EUR/GBP cross trades on a weaker note around 0.8355 during the early European session on Thursday. The rising expectation that the European Central Bank (ECB) will lower interest rates again on Thursday undermines the shared currency against the Pound Sterling (GBP). 

The ECB is expected to cut the deposit rate by another quarter-point to 3.25% at its October meeting on Thursday after data showed that the rapid retreat in inflation is being accompanied by a deteriorating economy. Paul Hollingsworth, chief economist for Europe at BNP Paribas, noted that the ECB shifted its focus from too-high inflation to too-weak growth, adding that “it makes perfect sense to accelerate the pace of easing, even if high uncertainty still calls for some caution.”

Traders will take more cues from the press conference after the interest rate decision. Any dovish comments from the ECB Christine Lagarde could exert some selling pressure on the Euro (EUR). 

On the other hand, the UK inflation eased sharply in September, spurring rate cut bets by the Bank of England (BoE) in the November meeting. This, in turn, could weigh on the GBP and cap the downside for EUR/GBP. The annual Consumer Price Index (CPI) inflation eased to 1.7% in September from 2.2% in August, the lowest reading since April 2021, the Office for National Statistics revealed. The UK Retail Sales data will be published on Friday. However, if the report shows a surprise upside outcome, this could provide some support to the GBP in the near term. 

• EUR/GBP rose on Wednesday, attempting to recover the 20-day SMA.
•  RSI is rising sharply, while the MACD is flat and green, suggesting buying pressure is recovering.

On Wednesday's session, the pair landed at 0.8360 with a gain of 0.37%. The cross surged and attempts to recover the 20-day Simple Moving Average (SMA), but momentum is still flat. 

The Relative Strength Index (RSI) is currently at 48, which is in the negative area, but its slope is rising sharply, suggesting that buying pressure is recovering. The Moving Average Convergence Divergence (MACD) is flat and green, which suggests that buying pressure is also flat. 

In terms of price action, the pair has been trading within a range of 0.8352 and 0.8390. There are support levels at 0.8350, 0.8330, and 0.8315, and resistance levels at 0.8370, 0.8390, and 0.8400. In case the bulls fail to gain the 0.8360-0.8400 area, it might trigger a sharp selling pressure but a consolidation above could fuel a recovery. In the meantime, buying momentum remains subdued.

EUR/GBP daily chart

• EUR/GBP rises strongly to near 0.8380 as soft UK inflation prompts BoE dovish bets.
• UK service inflation slowed to 4.9% and the core CPI decelerated to 3.2% in September.
• Investors await ECB Lagarde’s speech for fresh interest rate outlook.

The EUR/GBP pair surges to near 0.8380 in Wednesday’s European session. The cross strengthens after the release of the United Kingdom (UK) Consumer Price Index (CPI) report for September, which showed that price pressures grew at a slower-than-expected pace.

Signs of inflationary pressures taming have prompted expectations of more interest rate cuts by the Bank of England (BoE) in the remaining year.

The CPI report showed that the annual headline inflation decelerated to 1.7%, below the bank’s target of 2%. Month-on-month headline CPI remained flat, which was expected to hardly grow. Annual core CPI – which excludes volatile items – rose by 3.2%, slower than estimates of 3.4% and the former release of 3.6%.

Meanwhile, inflation in the services sector also slowed sharply due to lower wage growth. The Service inflation, a closely watched indicator by BoE officials, grew by 4.9%, slower than 5.6% in August.

The Pound Sterling (GBP) was underperforming against its major peers from a few days after BoE Governor Andrew Bailey’s interview with the Guardian newspaper in which his comments were a bit dovish on the interest rate outlook. Bailey said the BoE could become "a bit more activist" and "a bit more aggressive" in its approach to lowering rates if there was further welcome news on inflation for the central bank, Reuters reported.

On the Euro (EUR) front, investors await European Central Bank (ECB) President Christine Lagarde’s speech for fresh guidance on interest rates, which is scheduled at 19:40 GMT. Comments from ECB Lagarde could be on the dovish side as price pressures in the Eurozone have decelerated sharply in September.

According to revised estimates, the annual CPI (EU norm) in France slowed to 1.4% in September from expectations and the prior estimates of 1.5%.

• EUR/GBP saw further losses and landed at 0.8330.
• Indicators continue to weaken with the RSI deep in negative terrain.
• As long as the cross holds below the 20-day SMA, the short-term bias will be negative.

The EUR/GBP pair continued its bearish trajectory on Tuesday, extending Monday's decline and falling to 0.8330, down 0.30% for the day. The recent drop reinforces the negative short-term bias, especially as the cross remains below the 20-day Simple Moving Average (SMA), which has turned into a resistance point.

The inability of the bulls to reclaim the 0.8400 resistance level highlights the weakness in buying momentum. This was underscored by a sharp drop in the Relative Strength Index (RSI), which now sits deeper in negative territory, falling below 40. This suggests increased selling pressure as the RSI moves further away from the 50-neutral line.

The Moving Average Convergence Divergence (MACD) continues to emit bearish signals. Although the histogram remains green, it is printing decreasing bars, indicating a fading bullish momentum and further weakening of the pair.

For bears to maintain control, a decisive break below the 0.8300 support level is needed to confirm the downtrend.

Support levels: 0.8320, 0.8300, 0.8280
Resistance levels: 0.8360, 0.8390, 0.8400

EUR/GBP daily chart

• EUR/GBP remains in the negative territory after the release of the economic data from both economies.
• The UK ILO Unemployment Rate (3M) (Aug) eased to 4.0%, down from July’s 4.1% reading.
• The annual inflation in France increased by 1.1%, while in Spain, it was recorded at 1.5% in September.

EUR/GBP continues to lose its ground for the third successive day, trading around 0.8350 during the European session on Tuesday. The EUR/GBP cross remains subdued following the release of mixed employment data from the United Kingdom (UK).

The UK ILO Unemployment Rate fell to 4.0% in the three months leading up to August, down from 4.1% in July and below the market forecast of 4.1%. Employment Change for August saw a notable increase of 373,000, up from 265,000 in July. Meanwhile, Average Earnings excluding Bonuses grew by 4.9% year-on-year for the same period, meeting expectations but slightly below the 5.1% growth registered in July.

Traders will likely focus on a series of key economic data from the United Kingdom, set to be released on Wednesday, including the Consumer Price Index (CPI), the Producer Price Index (PPI) and the Retail Price Index. These data releases could influence the Bank of England's (BoE) policy outlook. However, BoE officials have indicated that they may resume rate cuts at the upcoming meeting in November.

In the Eurozone, France's Consumer Price Index (CPI) fell by 1.2% month-over-month in September, following a 0.5% increase in August. This marks the sharpest monthly decline in prices since the series began in 1990. Year-on-year, inflation rose by 1.1%, down from 1.8% in August, primarily driven by significant drops in energy prices and a slowdown in service costs.

In Spain, annual inflation stood at 1.5% in September, the lowest level since March 2021, down from 2.3% in the previous month. Monthly inflation decreased by 0.6% in September, as expected, while annual core inflation also fell by 2.4%.

According to the October 2024 Bank Lending Survey (BLS), euro area banks noted the first negative impact of the European Central Bank's (ECB) interest rate decisions on their net interest margins since the end of 2022. Meanwhile, the effects on volumes of interest-bearing assets and liabilities continued to be negative.

• EUR/GBP remains in a range, unable to establish a clear trend.
• Bearish divergence in technical indicators points to a shift in momentum.
• The cross slid below 20-day SMA, but bears need a break below 0.8300 for conviction.

In Monday's session, the EUR/GBP declined and settled lower at around 0.8350, below the 20-day Simple Moving Average (SMA), a development that worsens the technical outlook and reinforce the short-term bearish bias

The EUR/GBP pair has been unable to sustain gains above the 0.8400 resistance level, indicating that the bulls are struggling to regain control. The Relative Strength Index (RSI) is currently at 45, indicating that the pair is in negative territory, below the 50-neutral threshold. Moreover, the RSI's decline suggests that selling pressure is intensifying.

The Moving Average Convergence Divergence (MACD) is also sending bearish signals. The MACD histogram is green and decreasing, indicating that buying pressure is waning.

 Support levels:  0.8320, 0.8300, 0.8280.
Resistance levels:  0.8390, 0.8400, 0.8430.

EUR/GBP daily chart

• 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.