EUR/GBP Hits Two-Week Low as UK GDP Beats Expectations

Traders' Opinions

Summary:

EUR/GBP slipped below 0.8560 as stronger UK GDP supported Sterling while German data and French debt concerns weighed on the Euro.

SELL EURGBP

EXP

TRADING

0.85500

Entry Price

0.84550

0.86000

0.85426 +0.00030 +0.04%

0.0

Pips

Flat

0.84550

Exit Price

0.85500

Entry Price

0.86000

The Euro extended its decline against the British Pound on Wednesday, pushing EUR/GBP below 0.8560 and marking a fourth consecutive session of losses. The cross is now down roughly 0.4% this week, with stronger UK economic figures contrasting with a less convincing German consumption picture.

Germany’s Retail Sales fell 0.4% in August, following July’s 2.5% decline. The annual reading showed a 1.3% recovery, improving from the previous 3.4% contraction but missing expectations for a 2% increase.

The UK delivered a more supportive set of figures. Second-quarter GDP growth was revised upward to 0.5% from 0.4%, while annual growth was upgraded to 1.4% from 1.2%. Britain’s Current Account deficit also narrowed to £19.932 billion, compared with a revised £21.12 billion previously and expectations for a widening to £25.6 billion.

Broader concerns surrounding the Eurozone continue to weigh on the common currency. Although Brent crude has retreated below $96 from Tuesday’s levels above $101, reducing some pressure on energy-importing European economies, France’s fiscal position remains a significant source of uncertainty.

French public debt climbed to €3.596 trillion in June, equivalent to 119% of GDP and its highest level since 1946. Political gridlock has complicated efforts to produce a convincing savings programme, while the spread between French and German bond yields has widened to 115 basis points, its largest since 2012.

The balance currently favours the Pound. Better UK growth figures are arriving at a time when the Euro is dealing with weak consumption signals and mounting French fiscal concerns. Lower oil prices offer some relief, but unless those pressures ease, EUR/GBP could remain vulnerable to further weakness below 0.8560.

Technical Analysis

EUR/GBP’s four-hour structure has turned decisively bearish, with the pair extending a sequence of lower highs and lower lows after its rejection from the 0.8605–0.8610 resistance region. The latest selloff has driven price into the 0.8540–0.8550 area, a zone that previously attracted buyers but is now coming under considerable pressure.

The immediate focus is whether sellers can secure a sustained break beneath 0.8540. Price action on the chart suggests that any short-lived recovery toward the broken support area could be met by renewed selling. Confirmation below this region would strengthen the bearish setup and expose the next significant support around 0.8520.

A breach of 0.8520 would represent another deterioration in the structure and could accelerate losses toward the 0.8500 psychological level. Beyond there, the chart leaves room for a substantially deeper decline toward the 0.8455–0.8460 demand zone, which represents the major downside objective.

On the upside, EUR/GBP would need to recover above 0.8550 to ease the immediate selling pressure. More importantly, a return above the 0.8580–0.8585 resistance zone would weaken the bearish outlook and reopen the possibility of a recovery toward 0.8605–0.8610.

For now, however, momentum remains tilted firmly toward sellers. The combination of repeated rejection from higher resistance, the developing lower-high structure and pressure on 0.8540 suggests that selling rallies remains the preferred scenario while EUR/GBP stays below 0.8585.

TRADE RECOMMENDATION

SELL EUR/GBP

ENTRY PRICE: 0.8550

STOP LOSS: 0.8600

TAKE PROFIT: 0.8455

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EUR/GBP Hits Two-Week Low as UK GDP Beats Expectations

Technical Analysis

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