Currency pairs forecast: GBPEUR

Trend bias:

• Relatively stable with modest GBP strength following divergent central bank messaging on Thursday 19 March
• Trading in narrow range around 1.1575-1.1590 over the past week

Factors in price action:

• BoE delivered hawkish hold with markets pricing 63 basis points of hikes by year-end
• ECB also held rates with markets pricing more than two quarter-point hikes in 2026
• Both central banks responding to inflation risks from Middle East conflict and surging energy prices
• There is more scope for the BoE to disappoint hawkish bets than the ECB, which could halt the pound's advance against the euro

This week (Mon–Fri preview):

• Monday: EUR Consumer Confidence expected to weaken to -14.6 from -12.2
• Tuesday: Eurozone PMIs forecast to decline (Manufacturing 49.3, Services 50.5) versus UK PMIs expected to soften modestly (Services 53.0, Manufacturing 51.0)
• Wednesday: UK CPI expected steady at 3.0% YoY; German IFO Business Climate anticipated to weaken significantly from 88.6 to 86.3
• Thursday: German GfK Consumer Confidence, Eurozone Manufacturing and Consumer Confidence, M3 Money Supply
• Friday: UK Retail Sales forecast to cool substantially; UK Consumer Confidence expected to deteriorate from -19 to -25

Key risks ahead:

• GBPEUR downside risks: Weaker UK economic data (retail sales, consumer confidence) may undermine BoE hawkish stance; softer UK PMIs relative to Eurozone
• GBPEUR upside risks: Sticky UK inflation supporting BoE tightening expectations; German economic weakness (IFO deterioration) may weigh on EUR
• Most likely direction: Modest GBP weakness - BoE and ECB reaction functions to dictate course, with more scope for BoE to disappoint hawkish bets; UK economic softening may offset inflation concerns

Factors in price action:

• Large repricing in central bank policy expectations made pound best performing non-commodity G10 currency against dollar since Iran conflict began
• BoE pricing saw more substantial shift compared to ECB given stubbornness of UK inflation and higher reliance on gas
• Two-year UK yields outpacing German peers, dragging EUR/GBP lower
• Energy price surge benefiting sterling relatively given repricing dynamics

This week (Thurs–Fri preview):

• Back-to-back BoE and ECB decisions Thursday will dictate course for the pair
• ECB expected to hold deposit rate at 2%, BoE at 3.75%
• Markets now pricing more than two quarter-point ECB hikes in 2026
• Relative hawkishness of guidance from both central banks will be critical

Key risks ahead:

• More scope for BoE to disappoint hawkish bets than ECB, which could halt pound's advance
• Sterling will struggle to hold recent gains given political instability and weak macroeconomic climate, according to Rabobank
• Energy shock weighs on both currencies but UK's higher gas reliance creates differentiation
• Most likely direction: modest euro gains if BoE signals dovish bias while ECB maintains hawkish stance

Factors in price action:

• UK's heavier gas reliance makes sterling more sensitive to energy-driven rate expectations
• BoE pricing shifted more substantially than ECB due to stubborn UK inflation and higher gas dependence
• Energy price rally making two-year UK yields outpace German peers
• Fading BoE rate-cut bets supporting the pound

This week (Mon–Fri preview):

• Both BoE and ECB meetings on March 19 will be critical
• More scope for BoE to disappoint hawkish bets than ECB, potentially halting pound's advance
• Traders balancing softening UK economy against potential dovish BoE dissent
• Inflation concerns will dominate in Europe

Key risks ahead:

BoE dovish surprise on growth concerns could reverse sterling gains. Unexpected ECB hawkish messaging could support euro. Energy price volatility given UK gas sensitivity. Most likely direction: consolidation with risk of reversal if BoE disappoints hawkish expectations.

Factors in price action:

• GBP outperforming EUR due to stronger yield support and lower energy exposure.
• Oil price moderation midweek helped temper some EUR weakness.
• GBP resilience limited by political headlines and ongoing domestic economic uncertainty.

This week (Thu–Fri preview):

• GBP: Industrial Production, Manufacturing Production, Trade Balance — may test GBP support.
• EUR: France CPI, Germany data — headline inflation remains key.
• USD: Core PCE, PCE, GDP price data — indirectly impacts GBPEUR through USD flows.

Key risks ahead:

• Soft UK data → GBPEUR lower.
• Strong EUR data → cross higher.
• Energy prices and geopolitical developments → cross volatility

Factors in price action:

• GBP benefitted off favouring rate differentials vs EUR

• EUR volatility with rising oil/gas prices and geopolitical uncertainty damaging support

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This week (Mon–Fri preview):

• UK: Industrial production, trade, manufacturing — GBP-sensitive data.

• Eurozone: CPI, factory orders — potential EUR drivers.

• US: Core PCE, GDP, durable goods, personal spending/income, JOLTS — influence cross via USD.

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Key risks ahead:‍

• Geopolitical/energy shocks → GBP under pressure via USD flows.

• UK political headlines or BoE commentary → GBP volatility.

• EURGBP may remain near recent lows, with upside limited unless risk sentiment improves.

Factors in price action:‍

• GBP gains early in the week faded as dovish BoE comments and fragile UK economic signals reinforced easing expectations.
• EUR mostly stable vs GBP, though elevated energy prices and risk-off sentiment limited upside.
• Cross remains sensitive to UK economic releases and USD-driven flows.

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This week (Thu–Fri preview):‍

• UK: Political headlines and BoE commentary remain the main GBP drivers.
• Eurozone: GDP final 4Q, German factory orders — potential EUR drivers.
• US: Payrolls, unemployment, retail data — influence cross indirectly via USD.

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Key risks ahead:‍

• Softer UK data or political headlines → GBPEUR lower.
• Further rise in energy prices → GBPEUR higher.
• Cross trading near recent lows → volatility likely if data surprises occur.

Factors in price action:‍

• GBP lost ground as BoE comments remained dovish and by-election risks added to political premium.

• EUR mostly steady vs GBP but weighed by weak German sentiment and risk-off flows favoring USD.

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This week (2–6 Mar):‍

• UK: Political risk and PMIs — headline sensitivity for GBP.

• Eurozone: CPI, PMIs, unemployment — potential driver of EUR vs GBP.

• US: Payrolls, unemployment, retail → impact cross indirectly via USD.

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Key risks ahead:

• Political uncertainty or weak UK data → GBPEUR lower.

• Eurozone CPI/PMI surprises → GBPEUR higher.

• USD strength → GBP weaker vs EUR → cross pressured.

Factors in price action:

• GBP remained sensitive to dovish BoE signals, ongoing political risk around Gorton & Denton by-elections, and lingering market caution from recent CPI and labour data.

• EUR mostly stable vs GBP but weighed by weaker German sentiment and risk-off flows.

• The cross remains sensitive to Eurozone CPI, PMIs, and USD-driven market moves.

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This week (23–27 Feb):

• UK: Political/fiscal developments — key for GBP direction.

• Eurozone: Final CPI and PMIs — potential driver of EUR performance vs GBP.

• US: Durable goods, regional surveys, jobless claims, PPI — influence the cross indirectly via USD.

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Key risks ahead:

• Softer UK political/fiscal developments → GBPEUR lower.

• Eurozone CPI/PMI surprises → GBPEUR higher.

• Strong USD → GBP weaker vs EUR → cross pressured.

Factors in price action:

• GBP gains early in the week faded as weak UK jobs and dovish CPI reinforced expectations for a March rate cut.

• EUR mostly stable vs GBP but affected by German sentiment and USD strength.

• Cross remains sensitive to UK labour/inflation prints, Eurozone PMIs, and USD-driven market flows.

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This week (Thu–Fri preview):‍

• UK: Retail sales and PMIs — key for GBP sensitivity.

• Eurozone: HCOB PMIs — potential driver of EUR performance vs GBP.

• US: Core PCE, GDP, PMIs — influence cross indirectly via USD.

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Key risks ahead:‍

• Softer UK retail/PMIs → GBPEUR lower.

• Strong Eurozone PMIs → GBPEUR higher.

• GBPEUR sitting on the 2026 low support area

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Factors in price action (Mon–Wed):

‍• GBP supported Monday by Starmer cabinet unity but stalled awaiting GDP (Thu).
• EUR steady vs GBP; early-week USD weakness allowed minor GBP/EUR gains

• Cross is sensitive to relative risk sentiment and political headlines in the UK.

This week (Thu–Fri preview):

‍• UK: Q4 GDP (Thu) — key driver for GBP performance.
• Eurozone: Trade data (Fri) — influences EUR and cross via sentiment.

Key risks ahead:

‍• UK GDP or political surprises → GBPEUR lower.
• Trade data easing → EUR softens → GBPEUR higher.

Underlying trend:

Soft — GBP remains underperforming vs EUR amid political uncertainty and dovish BoE bias.

Factors in price action:

‍• GBP weakness driven by BoE dovishness and UK political uncertainty.
• EUR supported relative to GBP despite ongoing trade headwinds and disinflation.

This week (9–13 Feb):

‍• UK: Q4 GDP release expected to show a soft end to 2025; early 2026 may see modest recovery as budget uncertainty fades
• Eurozone: Trade data provides additional context for EUR performance.

Key risks ahead:‍

• Weak UK GDP or worsening political headlines → GBPEUR lower.
• Euro-area trade surprise → EUR underperforms → GBPEUR higher.

Underlying trend:

‍Rangebound — both legs face policy uncertainty, limiting conviction.

Factors in price action:

‍• GBP and EUR both benefited from early-week USD weakness but gave back ground as USD stabilised.
• UK policy uncertainty ahead of the BoE contrasts with euro-area disinflation but steadier growth signals.
• Cross remains driven by relative central bank tone rather than outright growth optimism.

This week (2–6 Feb):‍

UK:

‍– BoE decision and updated forecasts the main event risk for GBP.

Eurozone:

‍– January CPI print key for confirming the disinflation trajectory.
– ECB communication watched closely for any discomfort with FX levels.

Key risks ahead:

‍• Dovish BoE signals → GBPEUR lower.
• Euro-area inflation undershoot → EUR softens → GBPEUR higher.
• Any hawkish tilt from ECB vs cautious BoE → GBPEUR pressured.

Underlying trend

‍Rangebound — cross driven by relative political and trade risk rather than macro strength.

Factors in price action:

‍• UK fundamentals remain soft, keeping GBP structurally fragile.
• EUR sentiment weighed down by EU-specific tariff threats, partially offsetting UK underperformance.
• Recent USD weakness and broader risk-off dynamics have reduced directional conviction in the cross.

This week (26–30 Jan):

‍• UK: Light data leaves GBP reactive to global sentiment.
• Eurozone: Preliminary Q4 GDP and confidence indicators

Key risks ahead:

‍• Escalation in US–EU trade tensions → EUR underperforms → GBPEUR higher.
• Weak UK headlines or risk-off shock → GBP underperforms → GBPEUR lower.
• De-escalation in trade rhetoric → EUR stabilises, cross refocuses on UK weakness.

Underlying trend:

Lower — EUR weakness offsets some GBP fragility, but the cross still favours downside.

Factors in price action:

‍• UK fundamentals remain soft, keeping GBP structurally weak.
• However, EU-specific tariff risks tied to Greenland place disproportionate pressure on EUR sentiment.
• The cross increasingly trades relative political risk rather than macro differentials.

This week (19–23 Jan):

‍• UK: Job market data (Tue) and inflation (Wed) all in focus this week and whether we see more dovish pricing on BoE rates
• Eurozone: Flash PMIs (Fri).
• Trade headlines remain a key driver of intraday volatility.

Key risks ahead:‍

• Escalation in US–EU trade tensions → EUR underperforms → GBPEUR higher.
• Weak UK job and inflation data → GBP drags the cross lower.
• De-escalation rhetoric → EUR stabilises, cross reverts to GBP weakness.

Underlying trend:‍

Downside bias — EUR remains the more stable leg as UK macro underperforms.

Factors in price action:

‍• UK growth data continues to disappoint, keeping GBP sentiment fragile.
• Euro-area data remains weak but predictable, limiting downside volatility.
• EUR hindered by threat of US/Greenland geopolitics.

This week (12–16 Jan):‍

• UK: Monthly GDP and production data — unlikely to shift the narrative unless sharply weaker.
• Eurozone: CPI finalisation and industrial output updates.
• US CPI may spill over indirectly via risk sentiment.

Key risks ahead:

‍• Weak UK GDP → GBPEUR lower.
• US CPI downside supports risk sentiment → EUR outperforms GBP.
• Any upside surprise in UK data → short-lived GBP relief.

Trend bias:

‍Rangebound with a mild upside bias — EUR supported by relative stability, but USD data dominates.

Factors in price action:

‍• Eurozone outlook remains steady after disinflation progress late last year.
• ECB firmly in wait-and-see mode early in 2026, limiting policy volatility.
• USD direction driven by US job data and ISM surveys rather than inflation.

This week (5–9 Jan):

‍• Eurozone: December CPI – focus on whether disinflation progress continues
• US: ISM services and December job numbers towards the end of the week will set the tone for USD. Fed speakers return, though unlikely to materially shift near-term pricing.

Key risks ahead:

‍• Weak US jobs report → USD selling → EURUSD higher.
• Job resilience → USD strength → EURUSD pressured.
• Risk-off tone → EUR underperforms USD but holds vs high-beta FX.

Trend bias:‍

Lower — GBP underperforms EUR into BoE easing.

Factors in price action:

‍• UK job softness and a likely BoE rate cut contrast with ECB policy stability.
• Euro-area data flow (PMIs, Ifo) provides clearer signals than UK growth prints.
• GBP remains sensitive to any inflation upside surprise ahead of the BoE.

This week:‍

• Tue: UK job market data; Eurozone flash PMIs.
• Wed: UK CPI; Germany Ifo.
• Thu: BoE cut expected, ECB holds.
• Fri: UK public finances, retail sales, confidence.

Key risks ahead:‍

• UK CPI upside surprise → GBP relief rally → GBPEUR higher.
• Soft UK job + dovish BoE → GBPEUR lower.
• Strong euro-area PMIs → EUR outperformance.
• Risk-off USD moves could indirectly weigh on GBP more than EUR.

Trend bias:‍

Mild GBP downside — UK continues to underperform globally, leaving EUR the steadier leg.

Factors in price action:

• GBP was boosted after services PMI’s were revised higher for Novembers final numbers
• EUR supported on data supporting that the ECB will likely not cut rates any further.

This week:

UK:

• ‍‍UK Jobs Report (REC/KPMG): labour market still weak; hiring intentions in focus.
• Monthly GDP (Oct) expected +0.1%; consumption trends still soft.
• Bailey + multiple BoE MPC appearances; Reeves questioned by Parliament.

Eurozone:‍

• Germany Industrial Production (Oct): expected +0.4% MoM after last month’s strong rebound; upside possible.
• Germany trade data: softer exports but a larger surplus

Key risks ahead:

• ‍‍Weak UK GDP or soft labour → GBPEUR lower.
• Strong German IP or firmer trade → EUR support.

Trend bias:

‍Rangebound — slight EUR advantage as euro-area data offers more direction than UK.

Factors in price action:

‍• Euro-area inflation expected to stay just above 2% in November before easing in December.
• Slowing Q3 wage growth softens persistence concerns.
• GBP goes through relief rally with the Autumn Budget taken in the markest stride and bond markets being appeased..

This week (1–5 Dec):

‍• Euro-area: November flash CPI, wages, unemployment.
• UK: Sparse data → GBP largely a passenger to EUR moves.

Key risks ahead:

‍• EZ CPI downside surprise → EUR softens, GBPEUR higher to test key resistance
• ECB rhetoric leans hawkish despite easing inflation → EUR firmer.

Trend bias:

‍Downside bias — GBP remains the weaker leg unless eurozone inflation undershoots materially.

Factors in price action:‍

• GBP continues to trade heavy amid UK fiscal uncertainty and soft demand data.
• EUR has a busy week of domestic inflation and sentiment inputs, giving it relative stability vs GBP.
• Cross continues to follow the relative data surprise model: weak UK + steady EU → GBPEUR lower.

This week (24–28 Nov):

‍• Budget focus: Chancellor Rachel Reeves faces a major credibility test — with income-tax hikes reportedly ruled out, reliance on smaller revenue measures may not fully reassure markets.
• Eurozone: German, French, Spanish, Italian inflation; German Ifo; Lagarde & Lane speeches.

Key risks ahead:

‍• Strong euro-area CPI → GBPEUR lower.
• Reeves fails to deliver a credible fiscal path → sustained GBP underperformance..

Our view:

‍GBPEUR trades vulnerable going into budget backdrop and the fallout will likely determine future direction of the pair

Trend bias:‍

Still biased lower — GBP struggles to outperform the euro absent strong UK data or clearer fiscal direction.

Factors in price action:‍

• UK CPI deceleration vs. eurozone services inflation stickiness sets up a relative-inflation narrative that has recently favoured the EUR.
• UK Budget uncertainty is amplifying GBP caution.
• Market increasingly focuses on relative macro performance as both regions enter a data-heavy week.

This week:‍

• UK headline CPI (Oct) + UK Flash PMI — both critical for GBP direction.
• Eurozone HICP (final) + ECB negotiated wages (Q3) — key for the EUR leg.
• Ongoing UK Budget chatter ahead of the Autumn Statement.

Key risks ahead:‍

• If UK CPI slows sharply while euro HICP/wages show stickiness → downside risk for GBPEUR.
• UK Budget uncertainty could extend GBP underperformance until fiscal plans are clarified.
• If euro wages soften or eurozone PMIs underwhelm, EUR may struggle — allowing GBPEUR to lift even if UK data is soft.
• NFP-driven swings in risk appetite may filter into GBPEUR volatility.

Our view:

‍GBPEUR is in a relative-data tug-of-war, but with UK fiscal uncertainty and weaker domestic momentum, risks lean mildly lower unless eurozone inflation/wage data disappoints.

Trend bias:‍

Still tilted to the downside after hitting new 2 ½ year lows.

Factors in price action:‍

GBP was weak going into last week’s BoE meeting on speculation that there could have been a surprise rate cut. No rate cut meant that markets covered their GBP shorts and we saw a rebound on the paid but nonetheless the pair remains in its September downtrend.

This week (key items):

• GBP: Job numbers and then 3^rd quarter growth numbers will be the focus this week as we gauge how the economy is doing. Soft numbers will likely add pressure back on GBP as well as continue to mount pressure on Chancellor Rachel Reeves ahead of her budget on November 26^th
• EUR: Second estimates of growth and job data due on Friday but unlikely to have a big impact unless we have a big deviation.

Key risks / scenarios:

• UK data likely to take precedence this week and an improvement in the job and UK growth numbers will be needed to see GBP continue to rebound from the lows

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Trend bias:‍

Bearish — GBP remains weaker relative to EUR.

‍Factors in price action:

• GBP declined with inflationary pressures easing raising the odds of a rate cut in December as well as the OBR downgrading productivity forecasts for the UK.‍

This week (3–7 Nov):

• The Bank of England will be in focus on Thursday with the latest interest rate decision as well as their Monetary Policy which will include updated growth/inflation forecasts for the UK. The BoE are not currently expected to cut rates this month, however, there has been calls from Goldman Sachs and Barclays that the BoE could well cut in this meeting. In light of the upcoming budget and recent CPI numbers, there is a good possibility that this meeting could be seen as dovish

Key risks ahead:

• If the BoE signals more dovishness, GBPUSD could drop further with no clear support on the pair until the lows in April
• Conversely, if BoE holds firm (less dovish than expected) and risk sentiment improves, GBPUSD may rally but likely capped given underlying UK headwinds and the upcoming Budget

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Trend bias:‍

Likely biased lower — GBP remains vulnerable relative to EUR still in light of concerns over Autumn Budget

Factors in price action:‍

• Lower than expected CPI numbers added to rate cut bets from the BoE putting pressure on GBP
• The EUR remains supported by the ECB’s cautious tone and lingering inflation concerns, even as eurozone growth slows.

This week (27–31 Oct):‍

• UK: With limited UK macro prints this week, GBP moves may be more sensitive to broad FX flows and external shock.

• Eurozone: On Thursday: ECB rate decision, Q3 preliminary GDP, unemployment, consumer confidence and CPI prints

Key risks ahead:‍

• If eurozone prints disappoint or ECB surprises dovish, GBPEUR could see some bounce.

• Encouraging numbers from the Eurozone and the 2025 lows could be under threat

Trend bias:‍

Still skewed to downside — GBP appears weaker relative to EUR under current dynamics unless GBP surprises.

Factors in price action:

‍• The cross will reflect the interplay between GBP’s inflation surprise (or disappointment) and EUR’s performance in the broader FX space.
• With limited USD-driven moves, cross flows may dominate — especially GBP vs EUR relative strength.
• Any eurozone surprise — positive or negative — could shift the balance.

This week (20-24 Oct):

‍• UK: CPI inflation will be the dominant input for GBP strength or weakness.
• Eurozone / EUR: Flash PMI (Friday) is key for EUR relative performance.
• Other: News flows, risk sentiment, and capital flows will likely accentuate cross moves.

Key risks ahead:

‍• If GBP inflation surprises upward, GBPEUR may see rally attempts (GBP strength).
• If EUR holds up or outperforms (or USD weakens broadly), GBPEUR downside may be limited.
• Again, fiscal surprises or data revisions in the UK could trigger outsized swings in the cross.
• Positioning risk into the flash PMI / CPI data could magnify moves.

Trend bias:‍

Bearish bias remains — GBP underperforming vs EUR given relative political and economic headwinds.

Factors in price action:‍

• Sterling remains under pressure amid weak UK fundamentals and political uncertainty.
• EUR weaker on back of political headwinds but moves minimal versus GBP

This week (13–17 Oct):

UK: The spotlight falls on the labour/employment report for September (jobs, wage growth) — a key input into BOE rate expectations.
EU: CPI data, ECB commentary.

Key risks ahead:

• Strong wage growth or tight labour market data would push back against GBP weakness, possibly triggering a relief bounce toward resistance.
• Weak jobs numbers or indications of labour softening may accelerate downside pressure, with GBPUSD potentially revisiting the August and May low

A soft eurozone CPI could add pressure on EUR

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Trend bias:‍

Found support off the July, August and September lows

Factors in price action:‍

Pound sterling looks set for further downside against the euro in the coming weeks, with the GBP/EUR exchange rate surprising early last week with an impressive rally, which quickly faded and a series of daily losses ensued. This reinforces the optimum tactical approach to GBP/EUR is to 'sell on rallies'.

This week:

• Eurozone: ECB Minutes

Key risks ahead:

• It would need a dovish minutes to see EUR sentiment weaken.

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Trend bias:

August downtrend still intact but support found on the August/July lows

Factors in price action:‍

Market sentiment on the UK remains negative with continued concerns of the UK economy which was illustrated by the worse than expected PMI numbers versus better than expected PMI numbers from Europe.

This week:

• UK: Labour party conference.‍
• Eurozone: EU CPI

Key risks ahead:

• Markets will be listening out for any hints from Chancellor Rachel Reeves of what could be released in the Autumn budget.
• Given markets are firmly pricing in no more rate cuts by the ECB – sharp fall in CPI could spur on rate cut bets and weaken EUR

Trend bias:‍

Downside bias for now in light of concerns of UK economy.

Factors in price action:

• UK’s CPI came in hotter than expectation, tightening BOE rate-cut expectations.
• UK PSNB hit 5 year highs piling pressure on the Chancellor
• Weakness or softness in Eurozone data (PMIs, growth) helps GBP/EUR, but not decisively.

This week:

• UK: PMIs likely move GBP more.
• Eurozone: Flash PMIs, ECB minutes, and sentiment indicators.

Key risks ahead:

• Strong Eurozone surprise or policy clarity from ECB could limit GBP/EUR upside.
• If UK data softens, or risk sentiment worsens, GBP/EUR may drop towards August/July Lows

Trend bias:

Pair finished unchanged last week, continuing its rangebound trend

Factors in price action:‍

French politics has kept pressure on EUR but weak job numbers also putting pressure on USD

This week:

• Eurozone: ECB Interest Rate Meeting
• US: Inflation numbers in the form of PPI and CPI

Key risks ahead:

• No fireworks expected by the ECB and no rate change expected either. Big surprise would be a dovish tone in ECB statement to hint at future rate cuts. A move to the upside could be seen should we see a set of weak inflation numbers stateside to pile further pressure on rate cut bets and pressure USD

Trend bias:

Sideways, consolidating within a tight range

Factors in price action:

• GBP on the backfoot on continued concerns about brewing stagflation in the economy as well as fiscal concerns that could arise in the upcoming Autumn Budget
• EUR weighed on with political risks in France

This week:‍

EU CPI on Tuesday

Key risks ahead:

• Likely to see a bigger reaction on the EUR should the EU CPI numbers undershoot and thus raising the prospect of further rate cuts by the ECB this year – EUR weakness if this is the case

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Trend bias:‍

Range-bound with mild GBP upside after last week’s CPI, but EUR resilience limiting further gains.

Factors in price action:‍

Sterling benefitted from hotter UK inflation, narrowing the perceived policy gap with the ECB. EUR has also found support from softer USD and risk sentiment, leaving cross choppy.

This week:

• Eurozone: Ifo, ECB minutes provide policy tone and French and German CPI

Key risks:

• Weak UK data could reverse post-CPI GBP gains.
• If ECB minutes and CPI numbers has a dovish stance then EUR could soften, lifting the cross.

Trend bias:‍

Rangebound with slight downside risk as sterling momentum softens.

Factors in price action:

‍Sterling has held firm, but momentum is slowing as markets weigh the UK inflation outlook and the BOE’s cautious stance. Eurozone data remains soft, but the euro is finding some support as rate-cut expectations moderate. The pair sits close to support levels, keeping risks skewed to the downside if sterling underperforms.

This week:

• UK: July CPI (Wed), Retail Sales (Fri), Flash PMIs (Thu).
• Euro Area: Flash PMIs (Thu), Q2 negotiated wages (Fri).

Key risks ahead:

• Upside UK inflation surprise could lift sterling.
• Weak UK data or euro stabilization risks breaking below the first level of support.

Trend bias

GBPEUR remains rangebound, but the balance of risks is tilted to the downside for sterling.

Factors in price action:

Last week’s UK GDP beat gave the pound a short-term lift, but the bigger picture still points to a stagnating economy, cautious consumer sentiment, and uncertainty ahead of the autumn budget — all of which could limit upside potential.

On the euro side, positioning remains constructive, with EUR still the preferred vehicle for USD bearish bets. While eurozone data has been mixed, steady ECB guidance is providing a stable backdrop. GBPEUR has bounced around 2% from year-to-date lows following the BoE’s ‘hawkish cut’ and market repricing of UK rate expectations, but fundamental headwinds for GBP remain.

‍This week:

• UK data calendar is light; sterling will take cues from broader risk sentiment.
• Eurozone flash PMIs on Thursday are the key macro driver — softer numbers could weigh on EUR, but the bar for disappointment is relatively high.