• EUR/GBP steadies above 0.8100, although it remains on track for a 0.5% weekly decline.
• The positive impact of the lower Oil prices has been offset by uninspiring German data this week.
• In the UK, political uncertainty has kept the British Pound's upside attempts limited.

The Euro (EUR) is trading practically flat, around 0.8615 against the British Pound on Friday, showing some signs of bottoming after bouncing from 0.8600 lows on Wednesday. The Euro is drawing some support from lower Oil prices, while Sterling’s rally has lost steam, with markets on a wait-and-see stance, awaiting the UK’s leadership transition.

The increase in traffic through the Strait of Hormuz has pushed Oil prices down to pre-war levels, providing relief to the Eurozone economy and a moderate support to the Euro.  Eurozone macroeconomic data, however, was far from thrilling this week, with German consumer confidence and business climate data highlighting the soft momentum of the region's leading economy, which has weighed on the pair's recovery.

The British Pound, on the other hand, has lost steam, following the immediate positive reaction to Prime Minister Keir Starmer’s resignation on Monday. Markets seem to have given an initial confidence to Andrew Burnham, the most likely candidate to replace Starmer, but remain looking from the sidelines, awaiting clarity about Burnham’s policies.

Technical Analysis: A reverse Head & Shoulders in progress

EUR/GBP trades at 0.8616, holding in a neutral near-term stance with recent price action showing a reverse Head & Shoulders (H&S) figure with its neckline at the 0.8635 area. The 4-hour Relative Strength Index (14) is hovering around the 40 area, hinting at lacklustre momentum, and the Moving Average Convergence Divergence (MACD) has turned marginally positive, hinting at lower downside pressure, yet with bears still in control.

Bulls would need to break above the mentioned resistance around 0.8635 (June 23, 24 highs) to confirm the bullish H&S and shift the focus towards the June 19 low, at 0.8657. Session lows are at 0.8610, ahead of the weekly low at 0.8600. Further down, late June 2025 lows, at the 0.8510 area, would come into focus.

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