Forex News

• EUR/GBP trades choppy on Thursday as resilient UK GDP data supports the Pound while UK political uncertainty limits gains.
• Traders price in at least two rate hikes from both the ECB and BoE amid persistent Oil-driven inflation risks tied to Middle East disruptions.
• Technically, EUR/GBP remains capped below the 50-day and 200-day SMAs, keeping the near-term bias tilted to the downside.

EUR/GBP trades choppy on Thursday, with the British Pound (GBP) modestly outperforming the Euro (EUR) on the back of resilient UK economic data, while traders also assess growing political noise in the United Kingdom. At the time of writing, the cross is trading around 0.8659 after touching an intraday high of 0.8668 earlier in the day.

The UK economy expanded by 1.1% YoY in the first quarter of 2026, accelerating from 1.0% in the previous quarter and beating market expectations of 0.8%, according to preliminary estimates. On a monthly basis, UK GDP rose 0.3% in March, defying forecasts for a 0.2% contraction, though growth slowed slightly from February’s 0.4% expansion.

However, the GBP is struggling to build on gains from the stronger UK economic data as political uncertainty weighs on sentiment. Speculation over potential leadership challenges to Prime Minister Keir Starmer has intensified following Labour’s weak performance in recent local elections. UK Health Secretary Wes Streeting, who is viewed as a leading contender to replace Starmer, resigned from the government on Thursday.

Meanwhile, investor attention also remains focused on the monetary policy outlook for the European Central Bank (ECB) and the Bank of England (BoE) amid Oil-driven inflation risks stemming from ongoing disruptions in the Middle East. Traders are now pricing in at least two interest rate hikes from both central banks by the end of the year.

The Euro is failing to benefit from rising hawkish ECB bets as the Eurozone is viewed as more vulnerable to the ongoing energy shock due to its heavier reliance on imported energy, raising concerns about slowing economic growth. The prospect that the ECB may face greater difficulty in raising interest rates is keeping the near-term bias in EUR/GBP tilted to the downside.

Technical Analysis:

In the daily chart, EUR/GBP keeps a mildly bearish near-term tone as it holds beneath both the 50-day Simple Moving Average (SMA) at 0.8671 and the 200-day SMA at 0.8702. The pair is consolidating below these overlapping trend filters, suggesting rallies remain constrained for now, while the Relative Strength Index (RSI) near 48 stays neutral-to-soft and a slightly positive Moving Average Convergence Divergence (MACD) reading hints at only tentative upside momentum.

On the topside, initial resistance emerges at the 50-day SMA around 0.8671, with a stronger cap aligned at the 200-day SMA near 0.8702, where sellers could reassert control if the cross attempts a recovery. With no clear support levels from major averages below spot, any further downside would leave EUR/GBP vulnerable to probing lower swing areas, keeping the broader risk skewed toward additional weakness while price remains under the aforementioned moving averages.

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

Rabobank’s FX Strategy team notes that NOK/SEK has gained around 11% year-to-date as the Norwegian central bank turned more hawkish while the Riksbank stayed on hold. They highlight sticky inflation and Norway’s energy-exporter status as supportive for the Norwegian Krone. The bank prefers buying NOK/SEK on dips and targets 1.02 over a three-month horizon.

Norwegian Krone supported by hawkish Norges Bank

"At the same time, the Norges Bank swung from a dovish tone at the end of last year to a more hawkish stance based on domestically driven sticky inflationary pressure."

"This triggered a Norges Bank rate hike last week on the same day that the Riksbank maintained steady policy."

"While fiscal policy will help support consumption in Sweden and potentially lift underlying inflation pressures, sticky inflation has been a theme in Norway for a while."

"In the year to date, NOK/SEK has risen around 11%, and we see the potential for further upside in the months ahead."

"We favour buying NOK/SEK on dips and look for a move towards the 1.02 level on a 3-month view."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

DBS Bank’s Philip Wee reviews recent FX volatility through the Pound, noting that GBP has been more resilient than EUR and CHF since Operation Epic Fury, helped by the UK’s lower exposure to the energy shock and higher policy rates. However, he highlights that GBP has recently underperformed as markets refocus on UK political risks and reassess Bank of England tightening expectations.

Pound resilience gives way to politics risk

"Following the start of Operation Epic Fury, GBP (-1.9%) was more resilient than the EUR (-2.2%) and CHF (-3.8%) in March."

"In April, GBP (+2.9%) outperformed the CHF (+2.3%) and EUR(+1.5%)."

"However, GBP (-0.6%) underperformed the EUR (-0.2%) and CHF(-0.1%) in the first half of May."

"Markets now see GBP facing a reality check as focus shifts from the US-Iran conflict to 10 Downing Street."

"In the end, the GBP’s outlook remains tethered to the escalation or resolution of the Iran conflict, primarily because of how it dictates the USD’s strength."

"UK politics drives GBP when it threatens fiscal solvency in a major way, such as Lizz Truss’s mini-budget crisis in 2022. Like it or not, GBP is still holding on to its post-Operation Epic Fury appreciation, in contrast to EUR and CHF. "

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Initial Jobless Claims increased to 211K vs. the previous week.
• Continuing Jobless Claims went up to 1.782M.

According to a report from the US Department of Labour (DOL) released on Thursday, the number of US citizens submitting new applications for unemployment insurance increased to 211K for the week ending May 9. The latest print came in above initial estimates and was higher than the previous week’s 199K (revised from 200K).

Additionally, the 4-week moving average went up by 0.750K, bringing it to 203.75K from the revised average of the previous week (203K).

The report also indicated that Continuing Jobless Claims increased by 24K to 1.782M for the week ending May 2.

Market reaction

The Greenback advances modestly amid steady uncertainty in the geopolitical landscape, with the US Dollar Index (DXY) navigating the 98.50 area in a context of widespread lack of direction in the global markets.

• US Retail Sales increased by 0.5% in April as anticipated.
• The US Dollar Index clings to modest daily gains above 98.50.

Retail Sales in the United States (US) rose by 0.5% on a monthly basis in April to $757.1 billion, the US Census Bureau reported on Thursday. This reading followed the 1.6% increase (revised from 1.7%) recorded in March and came in line with the market expectation. On a yearly basis, Retail Sales were up 4.9% in this period.

"Total sales for the February 2026 through April 2026 period were up 4.4 percent (±0.4 percent) from the same period a year ago," the press releases noted. "The February 2026 to March 2026 percent change was revised from up 1.7 percent (±0.4 percent) to up 1.6 percent (±0.2 percent)."

Market reaction

The US Dollar (USD) stays resilient against its rivals following this report. At the time of press, the USD Index was up 0.13% on the day at 98.58.