empty
22.04.2025 11:52 AM
EUR/GBP. Analysis and Forecast

This image is no longer relevant

The EUR/GBP pair is losing ground today after two consecutive days of gains, trading near the psychological level of 0.8600.

The pound is receiving support from optimism surrounding ongoing trade negotiations between the United States and the United Kingdom. Following the introduction of new 10% tariffs by President Trump on British goods and 25% tariffs on auto, steel, and aluminum imports, UK Prime Minister Keir Starmer is attempting to secure a trade agreement with the US.

However, the EUR/GBP pair has been cushioned from a deeper decline by weaker-than-expected UK Consumer Price Index (CPI) data for March, which has increased expectations that the Bank of England may cut interest rates at its May meeting. Current market expectations point to a total of 86 basis points in rate cuts by the end of the year, with a fourth rate cut expected in December. Lower inflation could give the Bank of England more flexibility to support the economy amid rising household spending and persistent global trade tensions. This could, in turn, exert downward pressure on the pound.

Downside pressure on EUR/GBP is limited as the euro is strengthening, supported by broad US dollar weakness. Concerns over the Federal Reserve's independence have grown following comments by Trump and National Economic Council Director Kevin Hassett, who stated that Trump is still considering replacing Fed Chair Jerome Powell.

In terms of monetary policy, the European Central Bank recently cut its deposit rate by 25 basis points to 2.25%—its lowest level since early 2023—while also abandoning language describing its stance as "restrictive." Due to growing trade tensions, the ECB acknowledged a worsening economic outlook, and markets are now pricing in three additional rate cuts by year-end.

Technical Outlook: The bullish scenario remains intact, as oscillators on the daily chart remain firmly in positive territory and far from overbought conditions. A successful break above the key 0.8600 level and resistance at 0.8617 would open the way toward 0.8696, with a possible test of the monthly high.

On the other hand, the 0.85530 level remains the first major support. A break below it could lead to further declines toward 0.8520 and the psychological 0.8500 level, at which point bearish momentum may start to dominate.

Irina Yanina,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Gold Rebounds as Fiscal Risks Resurface

Gold is swinging between extremes as spring draws to a close. The week ending May 16 was the worst for the precious metal due to optimism that, following a trade

Marek Petkovich 17:31 2025-05-23 UTC+2

AUD/JPY. Analysis and Forecast

Today, the AUD/JPY pair has started to attract buying interest, halting its pullback from the monthly high as demand for the Australian dollar emerges. Today's talks between U.S. Deputy Secretary

Irina Yanina 17:25 2025-05-23 UTC+2

USD/CAD. Analysis and Forecast

The pair is trending lower, dropping close to the key psychological level of 1.3800 amid broad-based U.S. dollar weakness. Traders have raised their expectations for Federal Reserve rate cuts following

Irina Yanina 16:43 2025-05-23 UTC+2

USD declares war on EUR

What's new is often just what's been forgotten. As spring draws to a close, the long-dismissed mantra "sell America" is making a comeback in markets. The phrase gained traction following

Marek Petkovich 14:59 2025-05-23 UTC+2

USD/JPY: what happens with yen?

The USD/JPY pair is experiencing heightened price turbulence. At the end of April, the pair sharply declined, hitting a 7-month low at 139.90. Then, last week, a northbound impulse pushed

Irina Manzenko 13:52 2025-05-23 UTC+2

Market Chaos to Continue (There is a likelihood of continued local declines in #USDX and gold prices)

Markets continue to act blindly amid the chaotic actions of Donald Trump, who is trying to pull the U.S. out of a deep, all-encompassing crisis like Baron Munchausen pulling himself

Pati Gani 10:19 2025-05-23 UTC+2

The Market Tucks Its Tail

A necessary project at the wrong time. The House of Representatives has approved Donald Trump's tax cut initiative. The President hopes it will help stimulate the economy and offset shortcomings

Marek Petkovich 09:29 2025-05-23 UTC+2

GBP/USD Overview – May 23: No Talks, but Hang in There

On Thursday, the GBP/USD currency pair traded relatively calmly, but like EUR/USD, it has been rising for two weeks. At first glance, one might wonder what reasons traders have

Paolo Greco 08:15 2025-05-23 UTC+2

EUR/USD Overview – May 23: The Rebellion Against the Dollar Continues

The EUR/USD currency pair traded relatively calmly on Thursday, yet it has risen significantly over the past two weeks. This movement can be interpreted in several ways. From a technical

Paolo Greco 08:15 2025-05-23 UTC+2

What to Pay Attention to on May 23? A Breakdown of Fundamental Events for Beginners

Very few macroeconomic reports are scheduled for Friday. Only two are noteworthy: the final estimate of Germany's Q1 GDP and April's UK retail sales data. The German GDP report

Paolo Greco 05:58 2025-05-23 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.