Key Highlights: Weaker Eurozone PMI data and Germany’s factory order slump weigh on the Euro, while GBP remains resilient ahead of BoE rate decision.
EUR/GBP Weakens Amid Soft Eurozone Data and Weaker German Manufacturing Outlook
The EUR/GBP pair has softened to near 0.8700 during the early European session on Wednesday, as Eurozone data came in weaker than expected. The Euro (EUR) is facing downward pressure against the Pound Sterling (GBP) after the HCOB Eurozone Composite PMI for July was revised down to 50.9 from 51.0, missing market expectations.
Data released by Germany’s Federal Statistics Office revealed a surprising decline in factory orders for June, signaling continued struggles in Germany’s manufacturing sector. This downbeat economic data, combined with the Eurozone’s sluggish growth, is likely to keep the European Central Bank (ECB) cautious about moving too quickly on further rate cuts.
Eurozone and BoE Events Driving EUR/GBP Movement
With Eurozone Retail Sales data due later today, traders are cautious about any further deterioration in economic conditions across the region. Meanwhile, trade talks between the EU and US remain uncertain. The EU announced that it would delay countermeasures against US tariffs for six months, which has added some uncertainty to the trade outlook. Any escalation in trade tensions could add to downward pressure on the Euro against the Pound.
The Bank of England (BoE) is set to make its rate decision on Thursday, with markets expecting a 25 basis point rate cut to bring the base rate down to 4.00%. This would mark the third rate cut of 2025, and market expectations are high, with over 80% odds of a rate cut priced in. The GBP is likely to remain resilient ahead of the BoE’s monetary policy decision.
EUR/GBP Technical Outlook: Bearish Pressure Continues
Technically, the EUR/GBP pair is trading in negative territory, hovering around 0.8700. The pair continues to face bearish pressure amid Eurozone’s weaker-than-expected PMI data, with further downside potential if the BoE delivers the expected rate cut.
- Key Support: The next support for EUR/GBP appears near 0.8650, a level that has held previously in recent price action.
- Key Resistance: On the upside, EUR/GBP may face resistance around 0.8750 and 0.8800.
Outlook: Focus on Eurozone Data and BoE Rate Decision
- EUR/GBP is likely to stay under pressure as weaker German factory orders and Eurozone PMI figures fuel concerns about economic growth in the region.
- The Bank of England’s rate decision on Thursday will be a critical catalyst for GBP strength, as a rate cut is widely expected. A more dovish BoE outlook could keep GBP in a bullish trajectory against the Euro.
Stay updated with real-time EUR/GBP market analysis, technical setups, and trading insights at DailyForex.pk.