EUR/GBP sees modest gains on Tuesday amid quiet market conditions, confined within a range due to lack of fresh catalysts. Traders await next week’s ECB and BoE meetings, keeping the pair stable above the 100-day SMA at 0.8713, though resistance at 0.8750-0.8755 caps immediate upside.
At the time of writing, EUR/GBP is at 0.8738, after dropping to 0.8720 earlier. A technical break above resistance could push the pair towards 0.8865, the highest level since April 2023. Below 0.8713, support lies at 0.8670, then 0.8600.
Momentum Indicators Show Soft Activity
Momentum indicators show soft activity; the MACD is negative, suggesting easing bearish pressure. The RSI at 42 indicates subdued momentum. GBP is a major global currency, involved in 12% of FX transactions, averaging $630 billion daily.
Economic strength impacts GBP value, assessed by GDP and PMI data. Strong data draws foreign investment, potentially leading to higher interest rates and a stronger GBP. Trade Balance also affects GBP; a positive balance strengthens the currency.
Weak economic data or a negative Trade Balance typically diminish GBP’s strength. BoE’s monetary policy, focusing on 2% inflation, is key to shaping GBP’s value.
As of December 9, 2025, we are seeing EUR/GBP stuck in a narrow channel, which is typical before major central bank announcements. The pair is holding above the key 100-day moving average at 0.8713, but the resistance around 0.8755 is preventing any real gains. This tight range suggests that traders are waiting for a clear signal from either the European Central Bank or the Bank of England next week.
Impact Of Recent Economic Data
Last week’s UK CPI data came in slightly hotter than expected at 2.4%, keeping pressure on the Bank of England to maintain its hawkish stance. Furthermore, the November jobs report showed wage growth remains sticky, which could push the BoE to signal rates will stay higher for longer. This backdrop has been a primary reason for Sterling’s underlying strength recently, capping the EUR/GBP pair.
Conversely, flash inflation figures from Germany and France for November showed a continued cooling trend, fueling speculation that the ECB might be the first to signal a policy pivot. We also saw that Eurozone Q3 GDP was revised slightly lower to 0.1% growth, highlighting a more fragile economic picture compared to the UK. This divergence in economic data is setting the stage for a potentially significant policy split between the two central banks.
Given this quiet market, implied volatility on EUR/GBP options has fallen, making them relatively cheap. Traders could consider buying straddles or strangles to position for a breakout in either direction following next week’s meetings. We saw a similar setup in mid-2024 where a period of low volatility was shattered by divergent central bank statements, leading to a significant move.
Considering the stronger UK data, we believe put options with strikes below the 0.8713 support level offer a compelling risk-reward profile. A decisive break here, driven by a hawkish BoE, would open the door to the next support level at 0.8670. This strategy allows for a directional bet with a defined downside, which is prudent given the event risk.
