EUR/GBP trades lower on Friday, holding around the mid-0.8500s and just below the 0.8570 region. The Euro struggles to extend gains against Sterling despite stronger-than-expected August flash PMI figures across both economies.
Eurozone business activity improved, with the composite PMI reaching a nine-month high. Manufacturing was the main source of strength, while German factory activity climbed to its strongest level in more than four years. However, the Euro’s outlook remained mixed as German Services PMI slipped back below the 50 threshold, indicating renewed contraction in the sector.
The UK also delivered encouraging PMI data. The composite reading exceeded expectations, largely supported by stronger Services activity, while Manufacturing weakened broadly in line with forecasts. Sterling remained resilient despite disappointing UK Retail Sales, which failed to generate sustained selling pressure in the Pound.
With economic data broadly positive on both sides of the cross, the PMI releases had limited influence on EUR/GBP. Instead, geopolitical developments remain the dominant factor shaping European currency sentiment.
Iranian President Masoud Pezeshkian said Friday that Iran wants to bring its conflict with the United States to an end, while emphasizing that any resolution should come from a position of strength. His comments were interpreted as a potential signal toward de-escalation, although uncertainty surrounding the conflict remains elevated.
The geopolitical backdrop has kept European currencies relatively constrained throughout the week, limiting the impact of otherwise supportive economic data. For EUR/GBP, Sterling’s resilience combined with improving UK activity has kept the pair under pressure.
A sustained move below the 0.8550 area could strengthen the bearish bias, while a recovery above 0.8570 would improve the Euro’s near-term outlook.
Trade idea:
EUR/GBP remains bearish below 0.8570; selling rallies toward 0.8560 could target 0.8520, while a break above 0.8580 would invalidate the bearish setup.