EUR/GBP Price Forecast: Trades in a Narrow Range Following Five Straight Weekly Declines

• The BoE's hawkish rate rise offers limited support to the Pound, leaving EUR/GBP little changed.
• Trading beneath the main daily SMAs leaves the cross's broader bearish outlook unchanged.
• An elevated ADX indicates a strong downtrend, although the RSI points to oversold conditions.

At around 0.8339 at the time of writing, EUR/GBP is close to levels last recorded in April 2025. The cross is little changed on Friday, holding within this week's narrow trading range. Following five successive weekly declines that have left it oversold, the muted trading suggests sellers are pausing.

A 25 basis point interest rate increase to 4% by the Bank of England (BoE) on Thursday prompted only a limited market response. That was despite policymakers indicating that additional rises may be necessary to curb inflation. Meanwhile, worries about France's fiscal outlook are still supporting the Pound relative to the Euro (EUR).

Pound fails to retain gains despite hawkish BoE stance

Commerzbank analysts observe that “despite this rather hawkish decision, the Pound only benefited briefly and had to give up its gains as the day progressed.” Although they concede that “at first glance, this may seem confusing,” they highlight that “expectations ahead of the meeting were quite ambitious, with almost three further rate rises priced in by the middle of next year.” The market's scope to price a clearer policy trajectory was also constrained by Governor Andrew Bailey, who “gave no indication of the timetable following the next rate rise,” according to the analysts.

In this context, Commerzbank reiterates that “we remain firmly of the view that the BoE will not deliver a second interest rate rise until February rather than in December, as this would contradict its cautious approach to date.” The analysts also argue that “if the situation in the Middle East has stabilised by then and energy exports have normalised, the case for further interest rate hikes will be weaker.” Their assessment is that “until then, the Pound is likely to struggle to trade any higher.”

EUR/GBP retains a bearish technical outlook

Trading below the 50-, 100- and 200-day Simple Moving Averages (SMAs) keeps the near-term outlook for EUR/GBP bearish on the daily chart. These averages are grouped between approximately 0.8489 and 0.8599.

At around 24, the Relative Strength Index (RSI) indicates oversold conditions. Meanwhile, the Moving Average Convergence Divergence (MACD) has edged just above zero but retains a very shallow profile, suggesting that bearish momentum remains strong without gathering pace. This is consistent with the elevated Average Directional Index reading near 50, which points to a mature downtrend.

Any recovery faces an initial barrier at 0.8350, with resistance then at 0.8400 and 0.8450. Further obstacles are provided by the 50-day SMA at 0.8489, the 100-day SMA at 0.8523 and the 200-day SMA at 0.8599.

The recent low around 0.8330 provides immediate support. Should selling pressure return, a more extended decline would bring the next horizontal level at 0.8300 into focus.

(The technical analysis of this story was written with the help of an AI tool. Know more.)