The Euro is rising against the Pound Sterling, increasing by over 0.22% as pressure from the US Dollar grows. Tensions escalated after US President Donald Trump announced tariffs on 14 countries. The EUR/GBP exchange rate reached 0.8626 after falling to 0.8600 earlier in the day. Market sentiment is cautious, favoring the Euro over the Pound. Reports indicate that the US proposed a 10% tariff to the EU on all goods, with some exceptions for sensitive sectors like aircraft and spirits. Negotiations are ongoing, but Trump holds the final decision.

Germany’s Trade Balance Surplus

Recent data reveals Germany’s Trade Balance surplus at 18.4 billion Euros, beating the expected 15.5 billion Euros. UK news is limited, with eyes on GDP figures set to be revealed on Friday. The EUR/GBP pair shows a slight upward trend, with moving averages below the current rate. More gains seem likely as the Relative Strength Index is trending upwards. The main resistance level is 0.8670, with a possibility of reaching 0.8700. If the exchange rate drops, support is at the 20-day SMA of 0.8561, followed by another support level at 0.8508 if declines continue. The increase in EUR/GBP to 0.8626 from a low of 0.8600 shows a clear shift in sentiment toward the Euro. This change is influenced by renewed risk appetite after Trump’s unexpected 10% tariff proposal targeting several countries, complicating already tense trade discussions with Europe. Although aircraft and spirits are excluded, the message is clear—there is little desire for compromise. In this context, the Euro is benefiting from institutional support and solid fundamentals, especially Germany’s better-than-expected trade data. A surplus of €18.4 billion, compared to the forecast of €15.5 billion, supports Euro momentum. With no significant UK economic news, the Pound may struggle ahead of Friday’s GDP data. This lack of developments does not mean stability; it leaves the currency vulnerable while its Euro counterpart gains strength.

Technical Analysis of EUR/GBP

Analyzing the EUR/GBP technically indicates further potential for growth. Momentum indicators, like the rising RSI, align with the price trends that exceed short-term moving averages. The distance from the 20-day SMA of 0.8561 provides solid support, while resistance at 0.8670 could be tested if buying continues. The 0.8700 mark may also come into play if market volatility stays high. Looking ahead, current price movements suggest possible higher volatility scenarios. The Pound isn’t gaining from calm conditions—it’s merely stagnant. This gives the Euro space to advance with each positive macro release or news related to US-EU relations that may increase investor uncertainty. However, if the pair drops sharply, keep an eye on the 0.8560 level. If that level breaks, the next demand area could be around 0.8508. Recent patterns indicate sellers have not maintained pressure to reach those levels without external triggers. Additionally, derivative traders now face two changing fronts: a strengthening Euro backed by strong trade figures and tariffs that favor European exporters by reducing American competition. Meanwhile, the Pound lacks direction without local drivers. This imbalance creates opportunities for short-term positioning. Use tools to assess relative strength and cross-asset correlations, especially ahead of the UK GDP on Friday, where expectations aren’t set in stone. We believe the markets currently favor positions aligned with short-term Euro strength, while exposure to the Pound may be penalized as downside momentum meets weak fundamentals. Adjustments should reflect the growing surpluses in the Euro area and expected trade disruptions from Washington’s volatility. Timing is crucial—watch how this pair behaves near the 0.8670 level. A rejection or breakthrough here will provide insights into market sentiment as we approach mid-month position adjustments. Create your live VT Markets account and start trading now.

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