FX.co ★ EUR/GBP

The (EUR/GBP) currency pair is currently characterized by a state of cautious consolidation, trading near 0.8738 and largely moving sideways in the absence of fresh fundamental catalysts. The pair is fluctuating within its recent trading range, having successfully bounced off a daily low near 0.8720. This period of relative calm precedes a major directional test as market attention is shifting to the monetary policy meetings of the two key central banks next week: the European Central Bank (ECB) on December 18 and the Bank of England (BoE) also on December 18, 2025. The EUR/GBP cross is profoundly influenced by the relative hawkishness or dovishness signaled by these two institutions, particularly concerning the future path of interest rates. Technically, the structure of the EUR/GBP pair suggests a slight upward bias is still being defended, though immediate gains are capped. The price is currently managing to hold above the crucial 100-day Simple Moving Average (SMA) near 0.8713. This long-term moving average acts as a dynamic support level, and remaining above it reinforces the general uptrend established over the past few months. However, short-term movement is being strictly limited by the 50-day SMA, which is situated in the 0.8750-0.8755 level. This moving average has recently flipped from a support role to an immediate overhead resistance level, contributing significantly to the current ranging behavior. A decisive break and close above the 0.8750-0.8755 resistance would be a major signal to traders, helping to restore clear upward momentum. Such a move would effectively open the door for a rally towards the next significant long-term resistance at 0.8865, which represents the year’s high and the highest level seen since April 2023. On the downside, a daily close that falls below the 100-day SMA (0.8713) would be a key bearish trigger. If this support fails, the next target for sellers would be the strong support level at 0.8670, followed by the major psychological level of 0.8600. Momentum indicators currently reflect the subdued trading conditions. The Relative Strength Index (RSI) is at 42, indicating relatively weak short-term momentum and confirming the consolidation phase. The Moving Average Convergence Divergence (MACD) remains below the zero line, which is technically bearish, but the shrinking bearish histogram suggests that the downward pressure from sellers is easing. This easing pressure aligns with the pairs failure to extend its dips and its recovery from the daily low. The fundamental catalyst for the next breakout will undoubtedly be the monetary policy divergence. While the BoE is widely expected to cut rates in December (with markets pricing in a high chance of a cut to 3.75%), the ECB is expected to remain on hold (keeping its deposit rate at 2.00%). Should the BoE deliver a cut but signal a slower subsequent pace of easing than expected, or if the ECB unexpectedly turns more hawkish (as recent commentary has hinted at), the resulting narrowing of the interest rate differential would likely provide the necessary momentum for the EUR/GBP pair to finally break above its 0.8755 resistance. The outcome of these meetings will set the fundamental tone for the pair well into the first quarter of 2026. Given the high-impact nature of the upcoming policy announcements, risk management remains paramount for traders.