EUR/GBP traded just above 0.8655 on Wednesday, after falling nearly 0.7% this week. Eurozone and UK data offered little support for the pair.
Eurozone final HICP showed annual inflation rose to 3% in April from 2.6% in March. UK CPI eased more than expected in April, with the Pound slipping moderately.
Near Term Technical Picture
The near-term bias turned bearish after a reversal from last week’s highs. On the 4-hour chart, RSI is near 39 and MACD remains below zero.
Support is at 0.8655, with a one-week low near 0.8645 and the 11 May low at 0.8630. Resistance is near 0.8680 around the 200-period moving average, with Tuesday’s high above 0.8685 also in view.
Additional resistance sits near 0.8700, where the 61.8% Fibonacci retracement aligns with the 15 March lows. This week’s currency moves include EUR at -0.73% versus GBP and +0.20% versus AUD, while GBP is +0.73% versus EUR and +0.92% versus AUD.
We are observing a dynamic in EUR/GBP that feels familiar to what we saw around this time last year, in 2025. Back then, diverging inflation data between the Eurozone and the UK was the primary driver, pushing the pair down towards the 0.8655 level. This history provides a useful template for how we should be positioning ourselves now.
Policy Divergence Outlook
Today, we see UK inflation proving much stickier than expected, with the latest CPI print for April 2026 coming in at 3.1%, well above the Bank of England’s target. In contrast, Eurozone HICP sits at a more manageable 2.7%, giving the European Central Bank more room to consider easing. This echoes the policy divergence theme from 2025, where central bank leeway was a key factor for currency traders.
This policy divergence points to a bearish outlook for EUR/GBP in the weeks ahead. We believe traders should consider strategies that profit from a fall in the pair, such as buying put options or shorting futures contracts. The market is currently pricing in a prolonged hold from the Bank of England while anticipating at least one more rate cut from the ECB by year-end, which should strengthen the Pound against the Euro.
With the pair currently trading near 0.8800, a break below the recent support at 0.8750 could trigger a faster move downwards. We are watching the key psychological level of 0.8700, which we remember acted as significant resistance back in March of 2025. A sustained drop could even bring the May 2025 lows around 0.8630 back into play as a medium-term objective.
