EUR/GBP Hits Lowest Level in Two Years Amid Sterling Strength

Market Overview

The pound surged to its highest level against the euro in two years following Donald Trump’s victory, with short-term gains likely to persist. The euro remains under pressure due to Trump’s trade policies and declining yields on European bonds, whereas the UK, being a predominantly service-based economy, is comparatively shielded from the impacts of tariffs.

With these factors at play, sterling has capitalized on the situation, pushing the euro to multi-year lows, with momentum favoring the pound as traders price in a prolonged scenario of euro weakness.

Technical Analysis

The daily chart of EUR/GBP reveals that the downward channel remains intact, marking the fifth consecutive session of declines for the euro against the pound. The pair is trading in the lower half of the descending channel, which underscores the prevailing bearish pressure. A sustained break below the support level at 0.82984 increases the probability of further downside. Should this happen, the next targets on the radar are 0.82579, 0.82064, and ultimately 0.81495, which coincides with the bottom boundary of the descending channel.

On the flip side, a failure to maintain a close below 0.82984 could indicate a potential corrective move, with a target toward 0.83553 initially, followed by 0.84473 if upward momentum strengthens.

Oscillator Confirmation

All major indicators align with the current bearish narrative. The RSI remains in a downtrend, highlighting weaker demand for the euro, while the MACD continues to trend in the negative territory, confirming the selling momentum. Moving averages also present a consistent bearish signal, with price action below both the short and long-term averages.

Key Technical Levels Overview

Resistance Levels:

• Resistance 1: 0.82984
• Resistance 2: 0.83553
• Resistance 3: 0.84473

Current Price: 0.82812

Support Levels:

• Support 1: 0.82579
• Support 2: 0.82064
• Support 3: 0.81495

Key Events to Monitor

The EUR/GBP currency pair is poised for significant volatility on Tuesday, driven by several major economic releases. In the Eurozone, Germany’s final Consumer Price Index (CPI) will play a critical role in determining the euro’s short-term trajectory. Any surprises in this data could either reinforce the current downtrend or lead to a corrective rally. For the UK, the release of Claimant Count Change, Average Earnings Index, and the Unemployment Rate will serve as key gauges of the economic health and potential strength of the pound.

Furthermore, the ZEW Economic Sentiment Index for both Germany and the Eurozone will provide insights into economic outlooks, which may influence the euro’s valuation. If UK economic data come out stronger than expected, it will likely further bolster the pound, pushing EUR/GBP towards even lower levels.

Conclusion

EUR/GBP continues to trade lower, pressured by sterling strength and euro weakness. A break below key support levels could push the pair further into bearish territory, with upcoming economic data playing a crucial role in determining near-term direction.