EURGBP Struggles as France Fiscal Concerns Weigh on Euro

The EUR/GBP currency pair is experiencing a period of consolidation after a seven-day selloff, driven by the Euro’s weakness amid concerns over France’s fiscal position. At the time of writing, EUR/GBP is trading around 0.8488, recovering slightly from Monday’s low of 0.8458, its weakest level since July. The subdued price action is also attributed to a light economic calendar.

Analysts at Rabobank have revised their forecasts for the Euro downward, noting that while Europe’s current circumstances differ from past crises, France’s political and fiscal issues are more challenging than those of the UK. This divergence has contributed to the downward pressure on EUR/GBP, with the bank forecasting the pair to trade in a choppy range around current levels over the next 1-3 months. Their revised 3-month forecast for EUR/GBP stands at 0.85.

Technical analysis indicates a bearish near-term tone for EUR/GBP, as the pair trades below key moving averages, including the 50-, 100-, and 200-day SMAs. The Relative Strength Index (RSI) is nearing oversold territory around 29, while the Moving Average Convergence Divergence (MACD) remains negative. Immediate resistance is seen at 0.8500, with further barriers at 0.8540 and 0.8565. On the downside, support is found near 0.8455, with a sustained break below potentially exposing the 0.8400 mark.