Key Insight: The EUR/GBP pair holds near 0.8730 amid weaker German industrial data and rising anticipation around the Bank of England’s upcoming policy announcement. Traders await clues on the future rate path from BoE Governor Andrew Bailey.
📉 EUR/GBP Eases as German Industrial Production Disappoints
The Euro (EUR) continues to trade under pressure against the British Pound (GBP) on Thursday, with EUR/GBP slipping to around 0.8730 in the early European session. Sentiment toward the Euro weakened after Germany’s industrial production data missed expectations, raising fresh concerns about the health of the Eurozone’s largest economy.
According to Germany’s Federal Statistics Office, industrial output contracted by 1.9% MoM in June, far below the -0.5% forecast, and a sharp reversal from May’s revised -0.1% figure. On a year-on-year basis, output dropped 3.6%, deepening fears of a prolonged slowdown.
Despite the weak figures, the Euro showed limited immediate reaction, suggesting that traders are more focused on upcoming monetary policy developments.
🔍 BoE Decision in Focus: Rate Cut Expected, Guidance in Spotlight
Markets are closely watching the Bank of England (BoE), which is widely expected to cut interest rates by 25 basis points to 4.00% during Thursday’s Monetary Policy Committee (MPC) meeting. This would mark the third rate cut in 2025 as the central bank responds to slowing inflation and weak economic growth.
- Over 80% probability of a cut has already been priced in by markets, according to Reuters.
- A further quarter-point reduction is also expected before the end of the year.
However, the key focus will be on Governor Andrew Bailey’s post-meeting remarks, which may shape future expectations. Any signs of a more dovish tone or guidance indicating further easing could put downward pressure on the Pound Sterling, potentially supporting the EUR/GBP cross.
🌍 EU-US Trade Tensions Add to Eurozone Uncertainty
Adding to the Euro’s headwinds are renewed trade tensions between the European Union (EU) and the United States.
- The EU announced a six-month suspension of planned counter-tariffs on US goods.
- However, US President Donald Trump warned that the EU must honor its investment commitments or face 35% blanket tariffs on goods exported to the US.
The uncertainty around these talks could weigh on the Euro in the coming weeks, especially if trade tensions escalate.
📊 EUR/GBP Technical Outlook: Neutral Bias Below 0.8750
The EUR/GBP pair remains range-bound, trading below the 0.8750 resistance level. The pair continues to struggle for direction, awaiting a fundamental catalyst from the BoE meeting.
🔻 Key Support Levels:
- 0.8700 – Psychological and static support
- 0.8650 – Lower channel boundary
- 0.8615 – Multi-week low
🔺 Resistance Levels:
- 0.8750 – Immediate resistance
- 0.8790 – July high
- 0.8830 – 100-day moving average
A dovish BoE could send the pair back above 0.8750, while a hawkish surprise may trigger a renewed push toward 0.8650.
📌 Market Outlook: Cautious Tone Ahead of BoE
- EUR/GBP remains under pressure due to weak German data and Eurozone concerns.
- The BoE rate decision and accompanying commentary are expected to be the primary market driver for the pair.
- Ongoing US-EU trade tensions may further influence the Euro’s direction.
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