The EUR/GBP pair edged higher on Friday but remained capped below the 0.8700 mark after touching an intraday peak of 0.8725 during the European session. Ongoing political unrest in France and fiscal challenges in the UK continue to keep the cross confined within a familiar 0.8650–0.8750 trading range.
Euro steadies as French unrest offsets weak UK outlook
Market sentiment turned cautious after renewed geopolitical and trade tensions, with US President Donald Trump threatening additional tariffs on China following Beijing’s move to tighten export controls on rare earth materials.
In Europe, political instability in France remains a focal point. Talks between President Emmanuel Macron and opposition leaders concluded without a breakthrough, though Macron reportedly signaled readiness to delay the implementation of further pension reforms. French Ecologist Party leader Marine Tondelier noted that a left-wing prime minister is unlikely to emerge from the current political negotiations, highlighting continued uncertainty in Paris.
Sterling pressured by fiscal and labor market concerns
Across the Channel, the British Pound (GBP) remains weighed down by persistent concerns over the UK’s sluggish labor market and mounting fiscal pressures. A survey of recruitment firms indicated ongoing weakness in hiring activity, while investor sentiment toward Sterling has been dampened by expectations of higher taxes as Chancellor Rachel Reeves seeks to meet fiscal targets.
Central bank outlook: ECB likely on hold, BoE seen cutting in 2026
From a monetary policy perspective, both the European Central Bank (ECB) and the Bank of England (BoE) are expected to hold rates steady in the near term. However, the BoE is projected to deliver two rate cuts next year, while ECB President Christine Lagarde has indicated that the central bank’s easing cycle has likely concluded, noting that the “disinflation process is over.”
EUR/GBP technical outlook
From a technical standpoint, EUR/GBP remains in a mild uptrend but continues to trade in a consolidation phase. Bullish momentum has faded, and a drop below the 50-day Simple Moving Average (SMA) at 0.8677 could expose the October 8 low at 0.8656, with further downside potential toward 0.8600. On the upside, a sustained move above 0.8700 could open the door for a test of the September high at 0.8751.
Overall, the near-term outlook for EUR/GBP appears balanced, with political risks in France and fiscal uncertainty in the UK keeping the pair range-bound ahead of key macroeconomic updates from both sides of the Channel.
