EUR/GBP traded in a tight range on Thursday, as uncertainty over the US-Iran ceasefire limited directional trades. The cross held just above 0.8700 after falling to a one-week low near 0.8686 on the previous day.
Technically, the pair remains within a falling wedge pattern, which can point to a reversal as downward pressure eases. It is testing the upper edge of the wedge while holding above the 50-, 100- and 200-day Simple Moving Averages between 0.8685 and 0.8710.
Technical Momentum Signals
The Relative Strength Index is near 55, showing a mildly positive tone without overbought conditions. The MACD is still positive, suggesting upside momentum remains but is not strong.
If price breaks and holds above wedge resistance, it may target 0.8750 and then 0.8800. If it falls below the moving average cluster, it could move towards 0.8650 and then the wedge base near 0.8610.
A clear break below the support area around 0.8610 would cancel the reversal view and turn the outlook lower.
We recall looking at this exact technical setup back in 2025, when the pair was consolidating near the 0.8700 handle. The falling wedge pattern we observed did indeed resolve to the upside, initiating the broader uptrend we see today. That period of uncertainty proved to be a floor for the market.
Shifting Macro Backdrop
The move has been validated, with the cross now trading comfortably above 0.8850. The old resistance levels from last year, particularly 0.8750, have now become a significant area of underlying support. This structural shift is important for positioning in the coming weeks.
This fundamental picture is reinforced by recent economic data showing diverging paths for the UK and Eurozone. March 2026 Eurozone inflation came in higher than expected at 2.8%, forcing the ECB to maintain a hawkish stance. Conversely, the UK’s preliminary Q1 2026 GDP showed a 0.1% contraction, increasing the likelihood of a Bank of England rate cut by summer.
Given this bullish momentum, traders should consider buying call options to participate in further upside. For instance, purchasing the June 2026 calls with a strike price of 0.8900 offers a clear, risk-defined strategy. This allows traders to target a potential move towards the 0.9000 psychological barrier seen in late 2022.
Alternatively, for a more conservative approach that generates income, selling out-of-the-money put spreads is an attractive option. A trader could sell the 0.8750 put and buy the 0.8700 put for May 2026 expiry. This strategy profits if EUR/GBP stays above the 0.8750 support level, which was the key resistance we were watching last year.
