Euro Rises Against Sterling as Energy Relief Fuels Rebound

Key Moments

EUR/GBP Supported as Energy Pressures Ease

EUR/GBP attracted dip buyers at 0.8530, preserving the upside focus on the 0.8555 peak. The single currency is benefiting from a halt in hostilities between the US and Iran and a concurrent retreat in crude prices, developments that have helped improve sentiment toward the Euro. This comes as the pair retraces higher following a 2.5% slide from its June highs.

On Monday, the Euro (EUR) firmed toward the 0.8540 region against the British Pound (GBP) after Friday’s modest setback stalled at 0.8530. The cross remains aligned with an upward pattern that has been in place since the mid-July trough at 0.8455, with market participants watching three-week highs in the 0.8555 area as the next key test.

The Euro is drawing additional support from a moderate relief move as the US and Iran halted their hostilities. This has been accompanied by a pronounced reversal in crude prices, with Brent Oil falling roughly 9% from last week’s peak, sliding to $87.40 a barrel from levels above $96.00 seen last Thursday. Given that Eurozone economies are net importers of oil, the earlier surge in crude had raised concerns about pressure on economic activity, making the current pullback a supportive factor for the currency.

UK Backdrop: Fiscal Concerns and BoE in Focus

In the United Kingdom, investor sentiment remains cautious amid Prime Minister Andrew Burnham’s spending proposals, which are keeping financial markets on alert. At the same time, attention this week is turning toward the Bank of England (BoE) and its upcoming monetary policy decision.

The BoE is widely expected to keep interest rates unchanged. However, market participants are poised to scrutinize the distribution of votes among policymakers and Governor Bailey’s press release to gauge the likelihood of any future rate increase in the near term.

Technical View: Bullish Correction After June-July Slide

EUR/GBP is trading around 0.8543, maintaining a constructive short-term backdrop as it stays within an ascending channel that originated from the mid-July lows. The pair is in the process of retracing higher following a 2.5% retreat from its June peaks, with momentum metrics pointing to a modest upward bias.

The Relative Strength Index (14) is hovering near 60, signaling positive momentum, even as the MACD (12, 26, close, 9) has edged slightly into negative territory. This combination suggests a cautious but intact bullish tone.

The prevailing upside configuration keeps the July 8 and 24 highs at 0.8555 in focus as immediate resistance. A break above this zone would bring the top of the rising channel, currently near 0.8565, into view, followed by the July 2 and 3 highs, located around 0.8575, as further hurdles for buyers.

On the downside, initial support is seen near the intersection of the channel floor and the July 23 and 24 lows, around 0.8530. A move below that region would expose a prior resistance band around 0.8510, associated with the July 17 and 20 highs, ahead of the July 20 low at 0.8483.

Euro Performance Against Major Currencies

The table below presents the intraday percentage change of the Euro (EUR) versus a basket of major currencies. According to this snapshot, the Euro showed its strongest relative performance against the Canadian Dollar.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).