Strong retail sales data boosted the pound, causing EUR/GBP to fall back to 0.8735. Attention will now be focused on the guidance from the European and British PMIs.
2026-02-20 16:16:26
On Friday during the European session, the EUR/GBP pair continued its decline, trading around 0.8735. The pound remained strong, supported by robust economic data, putting pressure on the euro.
Data released by the UK Office for National Statistics (ONS) showed that retail sales rose 1.8% month-on-month in January, significantly higher than the previous month's 0.4% and far exceeding market expectations of 0.2%.
Year-on-year, retail sales grew by 4.5%, also exceeding market expectations of 2.8%. Strong consumer data indicates that domestic demand in the UK remains robust, easing market concerns about an economic slowdown.
This boosted the pound by reducing short-term bets on a rapid interest rate cut by the Bank of England. Regarding the euro, the European Central Bank president stated that she expects to remain in office until the end of her term in October 2027, without directly addressing reports of an early resignation.
While these remarks stabilized expectations for policy continuity, their boost to the euro was limited. The market will now focus on preliminary PMI data from the Eurozone and Germany.
If data shows improved economic activity, it could provide support for the euro; if it shows weakness, EUR/GBP could come under further pressure.
From the daily chart, EUR/GBP recently encountered resistance above 0.8800 and has fallen back, currently breaking below the short-term support of 0.8750, indicating a weak trend. The 20-day moving average has turned downwards, the MACD shows signs of a death cross, and the momentum bars are gradually expanding, indicating increasing bearish pressure.
The 4-hour chart shows that the exchange rate has formed a short-term descending channel structure, with the 0.8780 area forming initial resistance. The key support level below is at the psychological level of 0.8700; a break below this level could lead to a further test of the 0.8650 area.
The RSI is around 45, indicating that there is still room for further downside in the short term, but it has not yet entered the oversold zone. Overall, the technical structure leans towards a bearish bias within a range.
Editor's Note:
UK retail sales data significantly exceeded expectations, providing short-term support for the pound and putting downward pressure on EUR/GBP. However, the future direction of the exchange rate will still depend on the performance of the European and UK PMI data.
Improved Eurozone economic data could limit the decline; conversely, the pound may continue its strength. If PMI data is positive for the euro and it breaks through 0.8800, the risk of a trend reversal should be noted. Overall, the outlook remains volatile with a slight downward bias, but close attention should be paid to data-driven price movements.
Data released by the UK Office for National Statistics (ONS) showed that retail sales rose 1.8% month-on-month in January, significantly higher than the previous month's 0.4% and far exceeding market expectations of 0.2%.
Year-on-year, retail sales grew by 4.5%, also exceeding market expectations of 2.8%. Strong consumer data indicates that domestic demand in the UK remains robust, easing market concerns about an economic slowdown.
This boosted the pound by reducing short-term bets on a rapid interest rate cut by the Bank of England. Regarding the euro, the European Central Bank president stated that she expects to remain in office until the end of her term in October 2027, without directly addressing reports of an early resignation.
While these remarks stabilized expectations for policy continuity, their boost to the euro was limited. The market will now focus on preliminary PMI data from the Eurozone and Germany.
If data shows improved economic activity, it could provide support for the euro; if it shows weakness, EUR/GBP could come under further pressure.
From the daily chart, EUR/GBP recently encountered resistance above 0.8800 and has fallen back, currently breaking below the short-term support of 0.8750, indicating a weak trend. The 20-day moving average has turned downwards, the MACD shows signs of a death cross, and the momentum bars are gradually expanding, indicating increasing bearish pressure.
The 4-hour chart shows that the exchange rate has formed a short-term descending channel structure, with the 0.8780 area forming initial resistance. The key support level below is at the psychological level of 0.8700; a break below this level could lead to a further test of the 0.8650 area.
The RSI is around 45, indicating that there is still room for further downside in the short term, but it has not yet entered the oversold zone. Overall, the technical structure leans towards a bearish bias within a range.
Editor's Note:
UK retail sales data significantly exceeded expectations, providing short-term support for the pound and putting downward pressure on EUR/GBP. However, the future direction of the exchange rate will still depend on the performance of the European and UK PMI data.
Improved Eurozone economic data could limit the decline; conversely, the pound may continue its strength. If PMI data is positive for the euro and it breaks through 0.8800, the risk of a trend reversal should be noted. Overall, the outlook remains volatile with a slight downward bias, but close attention should be paid to data-driven price movements.
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