The Euro (EUR) has moved higher for the third consecutive day against the British Pound (GBP), trading at 0.8650 on Friday, but failed to break above the 0.8655 resistance level as risk-off sentiment prevails due to escalating tensions in the Middle East [1]. Brent Oil prices remain above $90, exerting pressure on crude-importing Eurozone economies, while news that Hezbollah rejected a ceasefire deal in Lebanon has dampened hopes for a swift end to Iran’s war and reopening of the Strait of Hormuz, further reducing risk appetite and keeping Euro bulls subdued [1][2].
In the UK, the Halifax House Price Index showed an unexpected contraction in May, with prices falling 0.1%, marking the fourth consecutive monthly decline, contrary to expectations of a 0.1% uptick. Year-over-year, housing prices grew at a 0.5% rate, up from April’s 0.4%, but only half of the 1% market consensus [1]. The GBP/USD pair holds modest gains near 1.3420 during European trading hours on Friday, but is set for its second straight weekly loss as Middle East tensions weigh and markets turn cautious ahead of the US employment report for May [2].
Technical analysis indicates EUR/GBP is consolidating in a symmetric triangle pattern, with momentum indicators showing a fading bullish bias. Bulls need to break above 0.8655 to target 0.8685 and 0.8690, while bears face support at 0.8635, 0.8630, and the key area between 0.8610 and 0.8620 [1].
Bank of England (BoE) policymaker Megan Greene sees a growing case for hiking interest rates as the Iran war increases the risk of broad price rises, but BoE governor Andrew Bailey remains dovish, stating the central bank is in no rush to raise rates given ongoing war uncertainty and weak UK growth. This divergence could drag the Pound lower against the US Dollar [2]. Analysts expect the US economy to add 85,000 jobs in May, with the unemployment rate projected at 4.3%. A weaker-than-expected report could undermine the US Dollar and support GBP/USD [2].
The Euro was the strongest against the Australian Dollar today, with a 0.21% gain, but only marginally higher against the Pound at 0.02% [1].
CONCLUSION
Escalating Middle East tensions and weak UK housing data have pressured both the Euro and British Pound, with EUR/GBP unable to break key resistance and GBP/USD facing its second weekly loss. Divergent Bank of England policy signals and anticipation of the US jobs report add to market uncertainty. Overall, sentiment remains cautious, with risk-off flows dominating and technical patterns suggesting limited upside for both currencies.