EUR/GBP fell on Friday after strong UK Retail Sales and early PMI data lifted Sterling. Eurozone flash PMI figures failed to boost the Euro. The pair traded near 0.8733, down about 0.13% on the day, but was still on track for a third weekly gain.
UK Retail Sales rose 1.8% month-on-month in January. This beat the 0.2% forecast and improved from December’s 0.4%. Year-on-year Retail Sales rose 4.5%, up from a downwardly revised 1.9% and above the 2.8% forecast.
Uk Data Powers Sterling
S&P Global’s early PMI readings were strong. The Composite PMI rose to 53.9, a 22-month high. Manufacturing climbed to 52, an 18-month high. Services held at 53.9. All three came in above forecasts.
The survey suggested GDP could grow by a little over 0.3% in Q1, if the pace continues into March. It also showed faster growth in manufacturing export orders, at the quickest pace since the pandemic.
In the Eurozone, the HCOB Composite PMI rose to 51.9 in February from 51.3. This was above the 51.5 forecast and marked a three-month high. Manufacturing jumped to 50.8 from 49.5, moving back above 50.0 and reaching a 44-month high. Services edged up to 51.8 from 51.6, but missed the 52.0 forecast.
Germany posted its fastest expansion in four months, while France was largely unchanged. In other countries, growth continued but slowed to its weakest pace since June 2025.
Strategic Implications For Eur Gbp
Around this time last year, a key shift started to take shape. UK data began to beat Eurozone data more often. That helped support the Pound through much of 2025. This gap in momentum still shapes today’s market.
UK strength has held up, especially on inflation. UK core inflation only recently fell below 3.0%, based on the January 2026 release. This has kept the Bank of England more cautious about cutting rates than the European Central Bank. When the BoE is more hawkish than the ECB, as in 2017–2018, EUR/GBP has often drifted lower.
This divergence may create options opportunities in the weeks ahead. Buying EUR/GBP put options, targeting a move toward 0.8550, could be a reasonable strategy. Recent figures still show a split within Europe. Germany’s February ZEW Economic Sentiment reading was a strong 15.2, while the wider Eurozone measure was weaker at 11.8. This points to ongoing internal softness.
Traders may want to position for more Sterling strength versus the Euro. UK services PMIs have averaged above 53.5 over the last six months of 2025. In contrast, Eurozone services have averaged around 51.5 over the same period. This fundamental gap supports short EUR/GBP positions, or derivatives that benefit if the pair falls.
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