EUR/GBP fell for a second day on Wednesday after UK inflation data supported the Pound. The pair traded near 0.8680, its lowest level since 31 March.
UK Office for National Statistics data showed headline CPI rose to about 3.3% year on year in March from 3.0% previously. Monthly CPI increased to 0.7% from 0.4%, while core CPI eased to 3.1% from 3.2%.
The rise in inflation was linked mainly to higher energy and fuel costs amid Middle East tensions. With CPI still above the Bank of England’s 2% target, rate cuts may be delayed, and further tightening remains possible if energy costs feed through.
In the Eurozone, preliminary April consumer confidence fell to -20.6 from -16.3. This points to weaker household sentiment alongside geopolitical risks and higher energy prices.
Technically, EUR/GBP stayed below the 100-day SMA at 0.8698 and the 200-day SMA at 0.8704. RSI remained below 50 and MACD moved slightly negative, with resistance around 0.8690-0.8705 and the April high near 0.8742, while support sits near 0.8680 then 0.8650.
We see the EUR/GBP pair has broken below its 200-day moving average, a technically bearish signal for the coming weeks. This weakness is driven by a stronger Pound, as UK inflation proves more persistent than in the Eurozone. Derivative traders should be positioned for further downside.
The latest UK inflation data, released on April 17, 2026, showed the Consumer Price Index (CPI) at a stubborn 3.1% for March, reinforcing the view that the Bank of England will delay rate cuts. This mirrors the situation we saw in late 2025, when higher-than-expected inflation pushed back market expectations for easing. With UK wage growth also holding firm at 5.6% according to the latest figures, the pressure for the BoE to remain hawkish is high.
Conversely, the Euro is struggling amid signs of a slowing economy, with today’s flash manufacturing PMI for April 2026 dipping to 49.5, indicating a slight contraction. This weak data, combined with falling consumer confidence, makes a European Central Bank rate cut more likely than one from the BoE. This growing policy divergence between the two central banks is the main driver of our bearish outlook on the pair.
For the next few weeks, we believe buying EUR/GBP put options with a strike price around 0.8650 is a direct way to position for a continued slide. The break of the key technical support suggests momentum is now to the downside. This strategy offers a defined risk, which is prudent given the potential for geopolitical news to cause sharp reversals.
Another approach is to sell out-of-the-money call spreads, for example, by selling the 0.8725 call and buying the 0.8750 call. This position profits if EUR/GBP stays below the 0.8725 resistance level, allowing traders to collect premium from the view that rallies will be limited. This is a lower-conviction trade that benefits from both a falling and a sideways market.
