EUR/GBP slips as US-EU trade deal lifts Dollar, BoE cut expected

• EUR/GBP drops over 0.15% as Euro weakens despite softer UK economic backdrop.
• Eurozone GDP slows to 1.4% YoY in Q2; Germany rebounds with 0.4% quarterly growth.
• BoE expected to cut rates next week, but sticky UK inflation keeps traders cautious.

The EUR/GBP extended its losses in the early North American session, down over 0.15% as traders digested trading news between the United States (US) and the European Union (EU). The shared currency has been pressured since the beginning of the week, even though the Bank of England (BoE) is expected to cut rates next week. The pair trades at 0.8636 after hitting a high of 0.8659.

Euro under pressure despite weak UK data, as upbeat US GDP and Fed focus weigh on cross ahead of BoE decision

Economic data in the US showed that the economy recovered and grew 3% according to Gross Domestic Product (GDP) figures for the second quarter of 2025. In the meantime, traders brace for the release of the Federal Reserve's monetary policy decision, at around 18:00 GMT.

Economic data in the EU revealed that GDP for the bloc expanded by 1.4% YoY in Q2 2025, down from 1.5% expansion in the first quarter. GDP figures in Germany showed that the economy grew from 0% to 0.4% QoQ in Q2 2025.

Germany's Retail Sales for June rose by 1% MoM, up from a -1.6% contraction in May, exceeding forecasts of 0.5% growth.

A scarce economic docket in the UK left traders leaning on last week's GDP print and Retail Sales data. The British economy seems to be struggling to grow, while sales missed estimates, growing less than expected.

Money markets had priced in close to 50 basis points of easing by the BoE toward the end of the year. However, inflation in the UK has proven to be stickier, and policymakers have grown divided about the economic outlook.

EUR/GBP Price Forecast: Technical outlook

The EUR/GBP has fallen below the 20-day Simple Moving Average (SMA) of 0.8657, after reaching a yearly peak of 0.8756 on July 28. The Relative Strength Index (RSI) fell toward its neutral line, an indication that sellers are gathering momentum. However, they need to clear the July 30 low of 0.8614 to test 0.8600, aiming to reach the 50-day SMA at 0.8564.

Conversely, if EUR/GBP rises past the 20-day SMA, buyers could target the 0.8700 figure. IF surpassed, the next area of interest would be the YTD high of 0.8756.