The Euro has lost ground against the British Pound, testing support around the 0.8800 level. Recent data from the UK services sector has strengthened the Pound, while improvements in the Eurozone Services PMI did not provide the same level of support for the Euro. The UK Services PMI increased to 52.3 in October from 50.8 in September. Meanwhile, the Eurozone’s Services PMI was revised to 53.0 for the same month, surpassing earlier estimates.

Pound Decline Against Euro

The Pound has dropped, hitting a new two-year low against the Euro due to hints of potential tax increases from the UK Finance Minister. On the technical side, the EUR/GBP’s 4-hour chart shows a bearish divergence, with the pair testing support at 0.8800. If the pressure continues, we could see the pair approach previous lows at 0.8760 and 0.8720. If it gains upward momentum, targets could rise to around 0.8880 and 0.8900, related to Fibonacci extensions. Today’s trading shows the Pound’s strength against the Canadian Dollar. The heat map below illustrates the percentage changes in currencies, comparing GBP/USD and its standing against other major currencies throughout the day. The EUR/GBP is at a crucial point, testing the 0.8800 support level. Mixed signals are present: strong UK services data suggests resilience in the economy, while government hints about future tax hikes raise doubts about growth. This uncertainty presents opportunities for traders who can prepare for a possible drop in the pair.

Pound’s Strength Influences

The Pound’s strength is supported by recent inflation data. The latest Consumer Price Index for October 2025 showed a stubborn inflation rate of 3.1%, slightly above predictions, which pressures the Bank of England to maintain its hawkish approach. In contrast, Germany’s recent industrial production figures displayed a contraction, leading markets to think the European Central Bank might adopt a more cautious stance in upcoming meetings. Technical analysis also leans towards a downward movement in the upcoming weeks. A bearish divergence on the 4-hour chart signals that the upward momentum is fading, which often precedes a price correction. We saw a similar pattern in the fourth quarter of 2024, which resulted in a significant drop after the pair couldn’t maintain key support levels. Given this situation, we might consider strategies that profit from a potential decline below 0.8800. Buying put options with strike prices near the support levels of 0.8760 or 0.8720 could be a low-risk way to capitalize on a downward trend. This offers protection against any unexpected strengthening of the Euro while providing substantial upside potential if the support fails. For those anticipating a slower decline or sideways movement, selling call spreads with a ceiling above 0.8850 is another effective strategy. This allows us to earn premium as time passes, profiting as long as the pair doesn’t rise significantly beyond its recent highs. The current fundamental and technical outlook suggests that upward movements may be limited in the short term. Create your live VT Markets account and start trading now.

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