EUR/GBP moves sideways amid uncertainty as conflicting data blurs the outlook

EUR/GBP Holds Steady Amid Mixed Economic Signals

As of Friday, the EUR/GBP pair is hovering near 0.8670, showing little movement for the day after failing to break above the 0.8690 level on Thursday. The currency pair continues to face downward pressure in the short term, recording a weekly loss of almost 0.3% and falling roughly 1.5% from its mid-November peak above 0.8800.

Eurozone Economic Developments

Recent German economic data has offered only modest support to the Euro (EUR). Industrial production increased by 0.8% in November, surpassing forecasts for a decline and following a 2.0% rise in October. However, the trade surplus narrowed significantly to €13.1 billion from €16.9 billion the previous month, as exports dropped by 2.5%. This combination of results has reignited doubts about the resilience of Germany’s economic recovery.

Across the Eurozone, retail sales climbed 2.3% year-on-year in November, beating expectations. Despite this positive surprise, the Euro failed to gain lasting momentum, as investors remain unconvinced that these figures are strong enough to prompt a shift in the European Central Bank’s (ECB) current cautious stance on monetary policy.

UK Outlook and Sterling Performance

In the United Kingdom, a quiet economic calendar has contributed to muted trading in the Pound Sterling (GBP). The currency remains under pressure following a downward revision of the S&P Global Services Purchasing Managers Index (PMI) earlier this week, which heightened worries about slowing economic growth amid persistent inflation. This challenging backdrop complicates the Bank of England’s (BoE) policy decisions and has so far prevented a sharper drop in the EUR/GBP exchange rate.

Looking Ahead: UK Employment Data in Focus

Attention now turns to the upcoming UK labor market report, scheduled for release on Monday. The results will be key in shaping expectations for the BoE’s next moves, especially after recent signals that any policy easing will be gradual. With ongoing uncertainty and mixed economic indicators, EUR/GBP is likely to remain range-bound in the near term, lacking a decisive trend.