The Euro (EUR) traded nearly flat against the British Pound (GBP) on Wednesday, hovering just above 0.8630 after pulling back from last Friday’s high of 0.8681 [1]. The pair has been pressured this week by a risk-off sentiment stemming from escalating tensions in the Middle East, particularly following an exchange of attacks between Iran and the US on Wednesday, which has also driven oil prices higher [1]. Despite the release of strong eurozone inflation data on Tuesday, the EUR/GBP pair failed to gain significant support [1].
On the macroeconomic front, market participants are awaiting the final HCOB Services Purchasing Managers’ Index (PMI) figures from the Eurozone and its key members, which are expected to confirm sluggish business activity in May. Similarly, the UK’s S&P Global PMI, also due on Wednesday, is anticipated to show weak performance [1].
Technical analysis indicates that EUR/GBP has found support just above 0.8630 but remains unable to stage a meaningful recovery. Momentum indicators on the 4-hour chart are bearish, with the Relative Strength Index (RSI) around 39 and the Moving Average Convergence Divergence (MACD) showing slightly negative levels, suggesting that any upside attempts could face resistance [1]. A further decline below the session highs near 0.8630 could expose the 2026 lows in the 0.8610-0.8615 area, which is expected to provide significant support. On the upside, initial resistance is seen at Tuesday’s high of 0.8641, with a further move potentially targeting last Friday’s top at 0.8681 [1].
In terms of daily performance, the Euro was the strongest against the New Zealand Dollar, while it showed a -0.13% change against the Pound and a -0.15% change against the US Dollar [1].
CONCLUSION
EUR/GBP remains under pressure amid geopolitical tensions and expectations of weak business activity data from both the Eurozone and the UK. Technical indicators suggest a bearish outlook, with limited upside potential unless key resistance levels are breached. Market sentiment is cautious, and traders are closely watching upcoming PMI releases for further direction.