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Euro builds momentum versus sterling as ECB hike bets intensify
Spain’s harmonised inflation jumped to 4.5%, while the market now sees a September ECB hike as roughly 60% likely, pulling EUR/GBP toward a technical breakout level.
The euro strengthened to $1.1697 against the dollar as ECB hike expectations gained traction, and the pair’s latest moves are also spilling into EUR/GBP. Action Forex reports that EUR/GBP has been compressing since mid-August into a tightening symmetrical triangle, with price sitting near the triangle apex around 0.8569.
Inflation surprises across France and Spain are supporting that shift. Spain’s harmonised inflation reading rose to 4.5%, its highest level since 2023, reinforcing expectations that the ECB deposit rate could rise to 2.80% by next March from 2.25% currently.
Sterling, by contrast, is dealing with mixed signals. The Bank of England left rates on hold in July with a 6–3 vote, and Governor Bailey closed the door on near-term hike bets, while UK inflation eased to 2.9% and private-sector wage growth slowed to its weakest pace since 2020.
Technically, Action Forex says EUR/GBP is poised for a decisive move as it sits on the 100-period EMA within the triangle. A breakout above the descending trendline and a retest of the 0.8587 highs would signal bullish continuation, while a drop below the ascending trendline and the 100-period EMA could expose levels near 0.8536 and potentially 0.8521.