EUR/GBP Holds Above Key Support as UK Economic Woes Pressure Sterling

EUR/GBP Holds Above Key Support as UK Economic Woes Pressure Sterling

The EUR/GBP pair continues to hold firm above the critical support level of 0.8623, trading near 0.8640 in Friday’s session. The Euro (EUR) is gaining ground against the British Pound (GBP) as investors factor in deteriorating UK fundamentals and interest rate divergence expectations.

Sterling Weakens Amid UK Economic and Budgetary Struggles

The British Pound faces sustained pressure following weaker-than-expected UK labor market data released on Thursday. Market sentiment is turning increasingly dovish toward the Bank of England (BoE), with rising expectations that policymakers may cut interest rates soon to support the economy.

“Economic uncertainty and worsening fiscal projections are making the Pound vulnerable,” note analysts at Tredu.

Euro Benefits from ECB Caution and Trade Hopes

Meanwhile, the European Central Bank (ECB) maintains a cautious tone without turning dovish, supported by stubborn inflation data across the Eurozone. This comparatively hawkish stance provides upside potential for the Euro, especially if US-EU trade talks in Washington yield positive updates—or even if silence fuels uncertainty for the Pound.

Technical Outlook: 0.8623 Holds, Upside in Sight

Technically, the 0.8623 support level remains intact, and as long as this threshold is defended, bulls retain control. Traders are likely positioning ahead of the August US-EU tariff deadline, with limited data flow on Friday leading to sentiment-driven trading.