EUR/GBP rose during the North American session on Friday, climbing to 0.8744 — up 0.74% and marking a four-week high as softer UK inflation readings reinforced expectations of further Bank of England (BoE) easing, despite stronger-than-expected Retail Sales.
Sterling pressured despite robust sales; euro buoyed by eurozone PMIs
The UK Office for National Statistics (ONS) reported that September Retail Sales rose 1.5% year-on-year, surpassing forecasts of 0.6%, driven by technology purchases and increased demand for gold from online retailers. Core sales, excluding petrol, jumped 2.3% YoY, above the 0.7% forecast, indicating resilient consumer spending.
S&P Global’s flash PMIs for the UK signaled improving business activity, while Eurozone HCOB Manufacturing and Services PMIs for October also surprised to the upside, rising from 49.8 to 50.0 and 51.3 to 52.6, respectively. The stronger-than-expected eurozone data lifted the euro, supporting EUR/GBP gains.
Meanwhile, UK inflation developments pushed the market’s implied probability of a year-end BoE rate cut to 65%, up from 49% two days ago but slightly below Thursday’s 75%, keeping sterling under pressure.
Technical outlook: EUR/GBP neutral to bullish, eyeing yearly highs
Technically, EUR/GBP has shifted from neutral toward a modest bullish bias. The Relative Strength Index (RSI) shows growing upward momentum, though the cross remains shy of the 2025 high at 0.8757. A decisive break above this level could pave the way toward higher targets.
Immediate resistance is seen at 0.8800, followed by the May 3, 2023 daily high at 0.8835. Support levels remain around 0.8700, where buyers have previously stepped in.
