• EUR/GBP trades sideways as traders await the UK local election results and monitor US-Iran peace deal prospects.
• Technically, the cross remains capped below the 100-day and 200-day SMAs, keeping the downside bias intact.
• Momentum indicators remain bearish, with the RSI holding near 40 and the MACD histogram staying in negative territory.

EUR/GBP trades flat on Thursday as traders remain cautious ahead of the UK local election results, while also assessing the prospects of a possible US-Iran deal aimed at ending the war in the Middle East. At the time of writing, the cross is trading around 0.8641, remaining confined within its one-week range as improving global risk sentiment offsets political uncertainty in the United Kingdom.

Polls suggest Prime Minister Keir Starmer’s Labour Party could suffer heavy losses in the local elections. This result could increase political uncertainty in the UK and potentially weigh on the British Pound (GBP).

Meanwhile, the Euro (EUR) is also struggling to gain traction as ongoing tensions in the Middle East and the resulting surge in Oil prices raise expectations that central banks may need to raise interest rates. This could widen the interest rate differential further between the European Central Bank (ECB) and the Bank of England (BoE), currently at 2.15% and 3.75%, respectively, offering support to the British Pound.

Against this backdrop, the broader bias in EUR/GBP remains tilted to the downside, with the technical outlook also pointing to a bearish bias. However, the upcoming UK local election results could weigh on the GBP and limit the downside in the cross.

Technical Analysis:

In the daily chart, EUR/GBP maintains a bearish near-term bias as spot holds under both the 100-day Simple Moving Average (SMA) and the 200-day SMA. The pair’s failure to reclaim these medium- and long-term averages suggests rallies are likely to be capped for now, while the Relative Strength Index (RSI) around 40 and a slightly negative Moving Average Convergence Divergence (MACD) histogram hint that downside momentum, although not extreme, continues to favor sellers.

On the topside, initial resistance emerges at the 100-day SMA near 0.8687, followed by the 200-day SMA around 0.8703, where a daily close above would be needed to soften the current bearish structure. Until those levels are reclaimed, the technical tone favors further consolidation or mild downside, with traders likely to sell into rallies while momentum oscillators remain subdued. On the downside, the next notable support emerges at the psychological level of 0.8600, where a break below could trigger further losses.

(The technical analysis of this story was written with the help of an AI tool.)