EUR/GBP is experiencing modest gains on Tuesday due to a quiet market, staying within a limited range as there are no new catalysts. Traders are looking ahead to next week’s ECB and BoE meetings, which helps keep the pair above the 100-day simple moving average (SMA) at 0.8713. However, resistance between 0.8750 and 0.8755 limits any immediate increases. At the moment, EUR/GBP is at 0.8738, after dropping to 0.8720 earlier. If the pair can break above resistance, it may rise towards 0.8865, the highest point since April 2023. Below the 0.8713 level, support is found at 0.8670 and then at 0.8600.

Momentum Indicators Show Weak Activity

Momentum indicators indicate weak activity; the MACD is negative, showing decreased bearish pressure. The RSI is at 42, reflecting low momentum. The GBP, a major global currency, accounts for 12% of FX transactions, averaging $630 billion every day. The strength of the UK economy determines the value of GBP, which is assessed using GDP and PMI data. Strong economic data attracts foreign investment, potentially leading to higher interest rates and a stronger GBP. The Trade Balance also influences the GBP; a positive balance supports the currency. On the other hand, weak economic data or a negative Trade Balance often weakens the GBP. The Bank of England’s monetary policy, focused on a 2% inflation target, is crucial for the GBP’s value. As of December 9, 2025, EUR/GBP remains stuck in a narrow range, typical before major central bank announcements. The pair is above the key 100-day moving average at 0.8713, but resistance at 0.8755 is preventing further gains. This limited movement suggests traders are waiting for a clear signal from the European Central Bank or the Bank of England next week.

Impact of Recent Economic Data

Last week, the UK CPI data came in slightly higher than expected at 2.4%, increasing pressure on the Bank of England to maintain a hawkish position. Additionally, the November jobs report revealed persistent wage growth, which could lead the BoE to indicate that rates will remain high for an extended period. This situation has contributed to the recent strength of the Sterling, capping the EUR/GBP pair. In contrast, preliminary inflation figures for Germany and France in November showed a cooling trend, raising speculation that the ECB might be the first to signal a change in policy. Furthermore, Eurozone Q3 GDP was slightly revised down to 0.1% growth, highlighting a weaker economic outlook compared to the UK. This difference in economic data suggests a potential policy split between the two central banks. Given the current quiet market, implied volatility on EUR/GBP options has decreased, making them relatively affordable. Traders may want to consider buying straddles or strangles to prepare for a breakout in either direction after next week’s meetings. A similar situation occurred in mid-2024 when low volatility was disrupted by differing central bank statements, resulting in significant moves. Taking into account the stronger UK data, we suggest that put options with strikes below the 0.8713 support level present a strong risk-reward opportunity. A decisive break below this level, driven by a hawkish BoE, would lead to the next support level at 0.8670. This strategy offers a directional bet with limited downside, making it a wise choice given the potential event risks. Create your live VT Markets account and start trading now.

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