EUR/GBP Climbs as Eurozone Data Beats Forecasts and UK Growth Outlook Dims

Summary:

EUR/GBP edges higher as firmer Eurozone data contrasts with growing UK rate-cut expectations. Markets tilt bullish on the cross as the Euro finds support from sticky services inflation while the Pound struggles under dovish BoE pressure.

Buy EURGBP

EXP

Trading

0.87949

ENTRY

0.89500

TGT

0.87400

0.87916 +0.00061 +0.07%

Point

Flat

0.87400

CLOSING

0.87949

ENTRY

0.89500

TGT

EUR/GBP extended modest gains on Tuesday, trading near the 0.8800 handle as the Euro outperformed the British Pound amid diverging monetary policy expectations between the European Central Bank and the Bank of England. The cross was last up roughly 0.15% on the day, continuing a gradual but consistent recovery fueled by softening UK fundamentals and slightly firmer momentum on the Eurozone data front.

The latest preliminary figures from Eurostat gave the Euro a fresh tailwind, revealing that Eurozone inflation remains more resilient than markets expected. The Harmonized Consumer Price Index (HCPI) ticked up to 2.2% year-on-year in November, up from 2.1% in October, and marginally beating forecasts. Although the core reading held steady at 2.4%, defying expectations for an increase, the data still underscores the challenges the ECB faces in steering inflation sustainably back to its target.

On a monthly basis, headline inflation slipped 0.3%, while core inflation fell 0.5%—a typical seasonal effect rather than evidence of a meaningful disinflation trend. Several economists, including those at Nordea, cautioned that services inflation at 3.5% YoY is still too high for policymakers to declare victory, noting persistent wage pressures that could spill into 2025 and 2026. This persistence in services inflation is one of the key reasons the ECB continues to signal a firm stance, even as broader economic conditions soften.

Meanwhile, the labour market is beginning to show signs of stress. The Eurozone unemployment rate held at 6.4%, its highest level in more than a year and a half, following upward revisions to September’s figures. Despite the uptick, several ECB officials have stressed that inflation is “fluctuating around the target”—a phrase intended to signal stability and reduce speculation about near-term rate cuts. Governing Council member Joachim Nagel reiterated that policy will remain steady for an extended period, reinforcing the Euro’s relative resilience.

Across the Channel, the British Pound continues to face mounting pressure as investors increasingly position for earlier-than-expected rate cuts by the BoE. UK Prime Minister Keir Starmer’s recent remarks—emphasizing the need to bring down both inflation and interest rates to revive investment—added to speculation that the BoE may soon act to support the slowing economy. Combined with easing wage growth and weakening hiring trends, markets have now almost fully priced in a cut at the next meeting.

Still, not all policymakers share the same level of urgency. BoE official Megan Greene pushed back on aggressive easing bets, stating she would only support cuts if employment and consumption deteriorate more sharply. Her comments helped stabilize the Pound temporarily but did little to fully lift sentiment as the broader economic narrative clearly tilts dovish.

Technical Analysis

From a market-structure perspective, EUR/GBP remains comfortably within its established bullish channel, showing signs that the recent corrective pullback has likely concluded after finding support near 0.8748. The pair has since rebounded toward 0.8785, supported by improving stochastic momentum—a signal that bullish momentum is attempting to reassert itself.

As long as the cross holds above the 0.8760 support region, the bullish outlook remains intact. A sustained push above the 0.8815 barrier would be a strong confirmation of renewed upside interest, likely opening the door toward 0.8855, with room for an extension to the 0.8950 next major resistance level.

TRADE RECOMMENDATION

BUY EURGBP

ENTRY PRICE: 0.8795

STOP LOSS: 0.8740

TAKE PROFIT: 0.8950

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Warren Takunda

Analysts

Warren Takunda, a seasoned finance leader specializing in the Middle East, is a trusted senior analyst with a proven track record. As head of the finance team, he excels in financial planning, analysis, and reporting. Warren's expertise in financial modeling and investment analysis delivers valuable insights to clients.

Rank

Articless

1900

Win Rate

63.58%

P/L Ratio

0.72

Focus on

XAUUSD, GBPUSD, EURUSD

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EUR/GBP Climbs as Eurozone Data Beats Forecasts and UK Growth Outlook Dims

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