EUR/GBP slips as strong PMIs cancel out and Iran signals de-escalation

Flash Purchasing Managers Index (PMI) surveys beat forecasts in both the Eurozone and the United Kingdom.
German manufacturing led the beat at a multi-year high, but German services slipped back into contraction, keeping the Euro mixed.
Iranian President Masoud Pezeshkian said Iran wants to end its conflict with the US now.

The Euro (EUR) is falling against the British Pound (GBP). EUR/GBP held the mid-0.8500s on Friday, hovering just below the 0.8570 area, even after a strong round of August flash Purchasing Managers Indexes (PMIs) on both sides of the cross. The reaction was muted for a simple reason: the data was good for both currencies.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

The Eurozone composite PMI rose to a nine-month high, with Manufacturing the standout. German factory activity hit its highest level in more than four years. The soft spot was German Services, which slipped back below the 50 line that separates growth from contraction, keeping the Euro's read mixed. In the UK, the composite also beat, driven by Services, while Manufacturing eased broadly in line. Weaker-than-expected UK Retail Sales did little to dent Sterling.

Iranian President Masoud Pezeshkian said on Friday that Iran wants to end its conflict with the US now, "from a position of strength", with the world acknowledging "its victory". Speaking at the Islamic Medical Association's assembly, he said those who "sit across the border and invite the enemy to invade" the country are "not Iranians". The tone points to de-escalation, and it is the Middle East risk backdrop, more than the growth surveys, that has kept European currencies on a tight leash this week.

Technical analysis:

In the 4-hour chart, EUR/GBP trades at 0.8563, capped by the 20-period Simple Moving Average (SMA) at 0.8566 and a dense band of nearby resistance, which keeps the short-term bias slightly bearish despite the pair holding just above the 100-period SMA at 0.8559. The Relative Strength Index (RSI 14) around 49 suggests neutral momentum, reinforcing the view of a capped market rather than a directional breakout.

On the topside, immediate resistance is clustered at 0.8565 and the 20-period SMA at 0.8566, followed by higher hurdles at 0.8571 and 0.8576. On the downside, the horizontal line at 0.8563 acts as a pivotal level currently being tested, with the 100-period SMA at 0.8559 providing the next layer of support if sellers regain control.

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