EUR/GBP declines as Pound strengthens on UK-US trade deal, EU faces higher tariffs

• Pound gains after UK becomes first to seal trade framework with US.
• Euro pressured as EU faces higher proposed tariffs than UK in talks.
• Traders cautious on UK outlook after welfare bill U-turn fuels fiscal concerns.

The EUR/GBP tumbles during the North American session, down by a 0.18% as risk appetite improved due to most US equity indices registering gains as traders brace for the release of the latest Federal Reserve monetary policy meeting minutes. At the time of writing, the cross trades at 0.8622.

Euro weakens to 0.8622 as markets cheer UK-US deal and eye Fed minutes

Financial markets continued to digest US President Donald Trump's trade war, which threatened to broaden tariffs and impose a 50% tariff on copper, as stated on Tuesday. in the meantime, the Pound Sterling benefits after being the first country to seal a trade framework with its US counterpart.

However, traders remain cautious regarding the Pound following last week's U-turn on the UK welfare bill, which increases the chances that the government will either increase borrowing or taxes to balance the public accounts.

Earlier, the Bank of England released its financial stability report, in which it flagged that risks remain high due to US tariffs.

In the meantime, negotiations between the EU and the US are showing some progress, though it seems that the EU will face higher tariffs than the UK. The EU has agreed to sign a temporary "framework" that will add 10% tariffs to EU goods, while talks continue.

EUR/GBP Price Forecast: Technical outlook

The daily chart suggests that the EUR/GBP pair is set to consolidate around the 0.8600 figure in the near term, despite the ongoing pullback. Although the downward move appears promising, sellers must clear 0.8600, followed by the 20-day SMA at 0.8567. A breach of the latter will expose the 0.8500 mark.

The Relative Strength Index (RSI) remains bullish but indicates that buyers are losing some momentum.

On the other hand, if buyers hold the pair above 0.8600, expect further upside near a downslope resistance trendline at 0.8650/75, before traders reach 0.8700.