Sterling Pushes Higher Against the Euro
GBP/EUR has climbed steadily over the past two weeks, reaching a six-month high of 1.1640 as UK retail sales and employment data exceeded forecasts. The pair is now testing the psychologically important 1.1650 resistance level that has capped advances since September 2025.
Technical analysts at HSBC highlight that a decisive close above 1.1650 could open the path towards 1.1800, a level last seen in early 2024. However, the pair remains vulnerable to ECB policy surprises and Eurozone PMI data.
Fundamental Drivers
The relative outperformance of the UK economy has been the primary driver. January GDP came in at 0.4% month-on-month, well above the 0.1% consensus. Meanwhile, Eurozone growth continues to stagnate, with Germany posting its third consecutive quarter of near-zero expansion.
The divergence in monetary policy expectations is also supporting sterling. Markets are pricing in just one more BoE rate cut in 2026, compared to two or three from the ECB. This widening interest rate differential favours GBP carry trades.
Key Levels to Watch
Resistance: 1.1650 (immediate), 1.1720 (200-week moving average), 1.1800 (psychological). Support: 1.1520 (20-day EMA), 1.1440 (trend support), 1.1350 (February low).
Traders using regulated FCA brokers should ensure they have appropriate risk management in place. Consider using guaranteed stop-losses around key technical levels.
Risk Disclaimer
Forex trading involves substantial risk of loss. This analysis is for educational purposes only and should not be considered investment advice. Seek independent financial advice before trading.
