EUR/GBP Held Below 0.8593 as UK Borrowing Hits Record Highs
The euro-pair remains trapped between moving averages despite record UK borrowing and a dovish Bank of England outlook.
Key points
- EUR/GBP trades near 0.8580, blocked by the 100-day SMA at 0.8593.
- UK August borrowing hit 18.3 billion pounds, halving fiscal headroom to 12 billion pounds.
- Analysts expect the Bank of England to raise rates by only 100 basis points in twelve months.
EUR/GBP trades near 0.8580, capped by the 100-day simple moving average at 0.8593. The pair remains trapped between the 50-day and 100-day averages, indicating a neutral technical bias for the near term.
British Pound pressure stems from UK fiscal concerns and a less hawkish Bank of England outlook. Neither buyers nor sellers hold clear control, as momentum indicators show weak directional strength.
UK Fiscal Deficit Weakens Sterling
UK government borrowing reached 18.3 billion pounds in August, exceeding forecasts by 3.5 billion pounds. This deficit has halved fiscal headroom to approximately 12 billion pounds, limiting the government’s spending capacity.
Analysts at Brown Brothers Harriman warn that this fiscal squeeze reduces the need for aggressive rate hikes. They expect the Bank of England to raise rates by only 100 basis points over the next twelve months.
Technical Range Limits Price Movement
Price holds below the 100-day SMA and the 200-day SMA, which cluster near 0.8641. The 50-day SMA at 0.8559 provides marginal support, but it has failed to trigger a decisive rebound.
The Relative Strength Index sits near 53, suggesting mildly positive momentum. A low Average Directional Index near 14 confirms a weak, directionless market that remains biased lower under key medium-term averages.
Market Sentiment Remains Cautious
FXStreet notes that the cross remains confined to a narrow range despite broader currency shifts. The British Pound’s weakness against the euro reflects persistent doubts about the UK’s economic trajectory and policy response.
