Key Moments
- EUR/GBP has been oscillating in a tight band below its 50-day SMA at 0.8584, trading around 0.8575.
- Rabobank strategists see scope for pound weakness and favor buying EUR/GBP on dips toward 0.8550.
- Upside targets sit at the 100-day and 200-day SMAs at 0.8630 and 0.8675, while support levels emerge at 0.8550, 0.8500, and 0.8455.
Range-Bound Trade Persists in EUR/GBP
The Euro (EUR) is slightly firmer against the British Pound (GBP) on Friday, but trading has stayed confined to a tight corridor over the last ten sessions. The earlier rebound from levels below 0.8500 seen in mid-July appears to be losing traction as the cross runs into a dense cluster of moving averages. At the time of writing, EUR/GBP is quoted near 0.8575.
Rabobank Sees Scope for Pound Weakness
Strategists at Rabobank highlight a recent repricing in market expectations toward “steady policy from the BoE this year,” combined with the possibility of increased “nervousness ahead of the October budget.” They argue this backdrop implies “scope for downside pressure on the pound as the summer draws to a close.”
Within this framework, Rabobank states it “favour[s] buying EUR/GBP on dips to the 0.8550 area,” and notes that “a break above the recent high in the 0.8588 region could increase upside potential.”
Technical Picture: Key Moving Averages in Focus
From a chart perspective, the 50-day Simple Moving Average (SMA) at 0.8584 currently limits the immediate topside. A decisive and sustained move beyond that barrier would open the way toward the 100-day SMA at 0.8630, followed by the 200-day SMA at 0.8675.
| Level | Type | Price |
|---|---|---|
| 0.8675 | 200-day SMA (resistance) | Upside technical objective |
| 0.8630 | 100-day SMA (resistance) | Intermediate upside level |
| 0.8588 | Recent high | Break could “increase upside potential” |
| 0.8584 | 50-day SMA (resistance) | Immediate cap on gains |
| 0.8575 | Spot (approx.) | Current trading area |
| 0.8550 | Support / buy zone noted by Rabobank | First downside level |
| 0.8500 | Psychological support | Next key floor |
| 0.8455 | Year-to-date low (near) | Major downside risk area |
Mixed Momentum Signals
Momentum readings present a nuanced picture. The Relative Strength Index (RSI) is at 54, indicating a modest bullish tilt, and the Moving Average Convergence Divergence (MACD) remains in positive territory. However, the weakening green histogram suggests the recent advance is struggling to muster sufficient strength to push the pair convincingly through the overhead moving averages for now.
Downside Levels to Watch
On the downside, initial support sits at 0.8550, a horizontal level that also aligns with the dip-buying area highlighted by Rabobank. Below that, the 0.8500 region acts as a psychological threshold. A clear break under this zone would leave the cross vulnerable to a move toward the year-to-date low near 0.8455.
Background: Euro and Policy Drivers
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
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