FX.co ★ EUR/GBP

The euro is holding firm against the pound, with the pair trading near 0.8662. Meanwhile, UK Prime Minister Keir Starmer is facing growing heat after Labour's disastrous local election results. Let us dive into the moving averages first. On the H1 chart, the 200 SMA sits at 0.8645, providing a safety net beneath the market. The 50 SMA on the same chart is at 0.8660, offering nearby support just under current prices. On the H4 chart, the 200 SMA is at 0.8680, acting as a resistance cap above. The 50 SMA on the H4 chart is at 0.8645, lining up perfectly with the H1 200 SMA. This rare double moving average convergence at 0.8645 gives this support zone serious technical muscle. The current price of 0.8662 is floating above the H1 200 SMA and H4 50 SMA, but remains stuck below the H4 200 SMA at 0.8680. That tells us buyers have a solid floor beneath them but face a big test just overhead. On the downside, the key support areas are as follows. First support is at 0.8645 to 0.8660, where three moving averages converge to form a powerful safety net. Second support is at 0.8620 to 0.8630, a demand zone from earlier price action. Third support is at 0.8600, the psychological round number, and a solid floor. More support levels include 0.8580 to 0.8590 and 0.8550 as deeper cushions. On the upside, the key resistance areas are as follows. First resistance is at 0.8690, where the H4 200 SMA sits as the first major hurdle. Second resistance is at 0.8720, a recent peak and supply zone. Third resistance is at 0.8750, a strong barrier from earlier trading. More resistance levels include 0.8810 and 0.8840 as higher targets. The pair is getting a boost from UK political drama and weak eurozone data. The 0.8680 level is the key line in the sand. A breakout above would open the door to 0.8710 and beyond, while a rejection could send prices back toward the 0.8645 safety net.

The political pressure on Prime Minister Keir Starmer has exploded after Labour's crushing defeat in last week's local elections. Reports suggest more than 80 Labour MPs are now demanding Starmer step down, and four cabinet ministers have already resigned under the mounting pressure. British Health Secretary Wes Streeting is reportedly positioning himself as a potential challenger for the top job. Starmer has dug in his heels, refusing to resign, with close allies saying he is ready to take on Streeting in any leadership battle. This political turmoil is hammering the British pound, since currency markets despise uncertainty. Across the Channel, eurozone economic news is not much better. The second GDP estimate confirmed the economy grew at a snail's pace—just 0.1 percent in the first quarter and 0.8 percent over the last 12 months. That is a sharp drop from the fourth quarter's 0.2 percent and 1.3 percent readings. Industrial production also disappointed, rising only 0.2 percent in March versus expectations of 0.3 percent. February's number was revised lower from 0.4 percent to 0.2 percent. On a yearly basis, factory output plunged 2.1 percent in March, much worse than February's 0.8 percent decline. These weak numbers are keeping the euro in check, even with the pound under political siege. So where does that leave EUR/GBP? The most likely path ahead is more back-and-forth trading between 0.8645 and 0.8680. The pair is trapped between two forces: a weak pound from UK politics and a soft euro from sluggish growth data. For traders watching the charts, the key levels to watch are support at 0.8645 and resistance at 0.8680. A drop below 0.8645 would target 0.8620 and then 0.8600. A climb above 0.8680 would target 0.8710 and then 0.8740. All eyes are now on Westminster. If Starmer resigns or faces a serious leadership challenge, the pound could slide further. If he manages to survive, the pound could bounce back.