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EUR/GBP Falls on Hawkish Fed Outlook, Eurozone Growth Concerns
Economic
Traders' Opinions
Summary:
EUR/GBP fell over 0.15% as robust U.S. growth data and a hawkish Fed outlook weighed on the euro, even with UK data weakening and BoE rate cuts expected. Technical signals point to further downside in the pair.
Sell
TradingEURGBP
EXP
0.86400
Entry Price
0.85000
TP
0.87000
SL
0.86379 +0.00260 +0.30%
0
Point
Flat
0.85000
TP
CLOSING
0.86400
Entry Price
0.87000
SL
The EUR/GBP currency cross continued its downward trajectory on Monday, shedding more than 0.15% and falling to 0.8636, after briefly testing intraday highs of 0.8659. The shared currency remains under pressure as investors recalibrate positions ahead of a crucial week for monetary policy, particularly with the Federal Reserve’s interest rate decision looming and market attention divided between diverging growth narratives in the U.S., eurozone, and the U.K.
The sharp pullback in EUR/GBP is rooted not only in regional dynamics but also in a robust macroeconomic backdrop in the United States. Freshly released second-quarter GDP figures from the U.S. revealed a stronger-than-expected economic performance, with annualized growth accelerating to 3%, well above the previous estimate and reaffirming the resilience of the American consumer and labor market.
This upbeat growth reading bolsters the case for the Federal Reserve to maintain a hawkish tilt or at least delay any easing decisions, even as inflation shows signs of moderation. With the Fed’s policy announcement due later on Monday at 18:00 GMT, traders have rushed to reprice interest rate expectations, leading to a stronger U.S. dollar broadly — and contributing to risk-off flows that favor the pound over the euro.
On the European side, economic data has been mixed, offering little support to the euro. Eurozone GDP expanded by just 1.4% year-over-year in Q2 2025, a slight deceleration from the previous quarter’s 1.5%. Germany — the bloc’s largest economy — did show some encouraging signs, with its GDP rising 0.4% quarter-on-quarter, up from a stagnant 0.0% reading in Q1.
German retail sales also surprised to the upside, increasing by 1% in June compared to a sharp -1.6% contraction in May and outpacing market forecasts for 0.5% growth. While this offered a modest tailwind for the euro, it has so far failed to materially alter sentiment toward the single currency, especially given lingering concerns about the sustainability of growth across the euro area.
The euro’s weakness can also be attributed to market skepticism over whether the European Central Bank will be in any position to hike further, or even hold steady, should disinflation trends persist into Q3.
Meanwhile, in the U.K., traders continue to wrestle with mixed signals. Last week’s GDP and retail sales data failed to inspire confidence, with the economy appearing increasingly sluggish. Yet, the British pound has remained somewhat resilient, as traders now question how aggressively the Bank of England (BoE) can pursue rate cuts.
Money markets previously priced in up to 50 basis points of easing by the BoE by year-end, but sticky inflation data has complicated this picture. Inflation remains well above target, and internal divisions among policymakers regarding the economic outlook have added a layer of unpredictability to the BoE’s next steps.
This backdrop has created an odd divergence: while expectations for a rate cut next week are intact, sterling has been buoyed by doubts over how much further the BoE can go. That skepticism has provided relative support for the pound — at least against a softer euro.
Technical Analysis
From a technical standpoint, the EUR/GBP has broken below a key rising support trendline, with the recent price action confirming a bearish bias.
Between July 11 and July 24, the pair traded within a tight consolidation range — a classic signal of accumulation or distribution. The breakout to the upside initially suggested bullish accumulation, but the rapid reversal and rejection from a key supply zone point toward a potential bull trap.
This failure to sustain momentum higher has shifted focus to the downside. Price is now approaching a well-defined Reversal Zone, and the institutional footprint suggests that market makers may have completed their distribution phase. The recent impulsive leg down confirms that bears are in control for now, and further downside toward the 0.8500 level or lower is likely if the current trend holds.
TRADE RECOMMENDATION
SELL EURGBP
ENTRY PRICE: 0.8640
STOP LOSS: 0.8700
TAKE PROFIT: 0.8500
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