EUR/GBP Surges as UK Economic Woes Spark BoE Rate Cut Fears

The EUR/GBP currency pair is gaining traction, climbing above 0.8650 as disappointing UK economic data fuels speculation of further Bank of England (BoE) rate cuts. On Friday, May’s economic indicators painted a grim picture, with UK GDP contracting by 0.1% against expectations of modest 0.1% growth. Industrial and manufacturing production also faltered, dropping 0.9% and 1.0% respectively, well below forecasts.

This economic slowdown has intensified pressure on the British Pound (GBP), boosting the Euro (EUR) as markets anticipate a dovish BoE stance. The pair’s bullish momentum is evident, breaking past the 23.6% Fibonacci retracement level at 0.8634, with the 10-day moving average trending upward and the Relative Strength Index (RSI) at 66, signaling strong but not yet overbought conditions.

A sustained move above the 0.8670 mark could pave the way for a retest of April’s high near 0.8738, with potential to reach the 0.8750–0.8780 resistance zone if UK data continues to disappoint or yield spreads widen. However, a retreat below 0.8634 might see support tested at the 10-day moving average of 0.8622 or the 38.2% Fibonacci level at 0.8576, with a further drop possibly targeting the 50-day moving average at 0.8494, shifting the outlook to neutral.