EUR/GBP has seen a slight recovery, currently trading around 0.8664 after some buying near the 0.8650 mark. A quiet economic calendar has led to low trading activity, keeping the pair near its multi-month lows. Technically, EUR/GBP continues to trend downward within a channel that started in November 2025. Both the 21-day and 50-day Simple Moving Averages are falling, adding to the downward pressure.

Resistance And Potential Break

Resistance is around the 0.8700 level. If this level breaks, it could trigger a bigger bounce. However, if the pair falls below 0.8650, it might head toward 0.8600, which was last seen in August 2025. Momentum indicators like the MACD and RSI show signs of stabilizing. The MACD remains below the signal line, and the RSI is around 34, indicating a possible consolidation phase. The Euro is used by 20 EU countries and is the second most traded currency after the US Dollar. Its value is heavily influenced by inflation and economic data. The European Central Bank in Frankfurt determines interest rates in the Eurozone, which also impacts the Euro. Important data like the Trade Balance further affects the Euro’s performance against other currencies. With ongoing selling pressure on EUR/GBP, the downward channel established in November 2025 remains intact. The technical setup suggests any rallies are likely to be sold off, with 0.8700 acting as a strong ceiling. Currently, the path of least resistance seems to be downward, aiming to break the 0.8650 support level.

Strategies For Traders

The technical weakness is compounded by differing economic data from the Eurozone and the UK. Last week’s flash estimate for Eurozone January HICP was a disappointing 1.8%, missing expectations and easing pressure on the European Central Bank to remain aggressive. In contrast, the most recent UK CPI data for December 2025 surprised with an increase to 3.2%, suggesting a stricter approach from the Bank of England. For derivative traders, this situation favors strategies that profit from a further decline or stagnation in the EUR/GBP pair. We suggest buying put options with a strike price around 0.8625 that expire in February. This strategy provides a clear way to position for a break below current support, potentially profiting from a decline toward the 0.8600 level, not seen since August 2025. For those seeking a more cautious approach, bear call spreads could be a good option. You could sell the 0.8700 strike call option and buy a higher strike call, such as the 0.8750, for protection. This position profits if the pair remains below 0.8700 until expiry, benefiting from both price drops and sideways movements in the coming weeks. The main risk to this bearish outlook would be a strong break above the 21-day moving average and the 0.8700 psychological barrier. Such a move would suggest a change in market sentiment, signaling the need to unwind bearish positions. Until then, we’ll keep viewing any strength as a selling opportunity. Create your live VT Markets account and start trading now.

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