UK election pressure limited the pound's gains, while the euro maintained its corrective rebound against the pound.
2026-05-11 15:31:08
On Monday morning in European trading, the euro/pound (EUR/GBP) pair retreated slightly after an initial rise, currently trading around 0.8650 . Despite some short-term pressure on the euro, the overall price structure remains in a mild recovery phase, with the market remaining cautious about further gains in the pound. Recent political developments in the UK have become a significant factor influencing the pound. As the results of local elections are gradually released, Prime Minister Starmer faces increasing political pressure. The Labour Party's performance in some regional elections and the Scottish and Welsh parliamentary votes fell short of market expectations, leading to growing concerns about the UK government's ability to implement future policies. Some market institutions believe that political instability in the UK may weaken market expectations for UK economic reforms, thus limiting the pound's medium- to long-term upside potential. Although the Starmer government is currently attempting to stabilize market confidence through economic reforms and improved relations with Europe, its approval ratings have continued to decline recently, and even calls for its resignation have begun to emerge within the party.
Political uncertainty in the UK is becoming a significant factor limiting the pound's continued strength. However, in terms of short-term market sentiment, the pound has maintained some resilience despite light trading at the start of the week, which is also a key reason why the euro has failed to rebound significantly against the pound.
On the other hand, the euro has also lacked significant strong support recently. Market surveys show that after US President Trump rejected Iran's latest peace proposal, the situation in the Middle East deteriorated again, and international oil prices rose again. Brent crude oil prices climbed back above $100 , and market expectations for a short-term resumption of normal shipping in the Strait of Hormuz have cooled considerably. Since the Eurozone is highly dependent on energy imports, rising international oil prices often put pressure on the Eurozone economy. Market analysts point out that continued increases in energy prices could further push up Eurozone inflation while suppressing manufacturing and consumer demand.
Some institutions worry that if oil prices remain high, the pressure on economic growth in the Eurozone may increase further. As a net energy importer, the Eurozone is significantly more sensitive to rising international oil prices than the UK. This is one of the important reasons for the recent overall weakness of the euro. In the short term, if political pressure in the UK continues to escalate, the pound may come under renewed pressure; however, if international oil prices continue to rise, the euro may also be dragged down.
From a technical perspective, the EUR/GBP daily chart shows that the exchange rate is currently maintaining a phase of recovery. After forming a double bottom pattern in the 0.8620 area , short-term buying power has clearly strengthened. On the daily chart, the exchange rate has now risen back above the 20-day moving average, indicating that the previous bearish pressure has eased. The MACD indicator has formed a golden cross at a low level, and the red bars are gradually expanding, showing that short-term bullish momentum is recovering. The RSI indicator has risen above 50, indicating that market sentiment has gradually shifted towards neutral to bullish. The 0.8620 area currently constitutes a key support level on the daily chart; a break below this level could reopen downside potential. On the upside, the area around 0.8655 remains the first major resistance zone. If a successful break above this level occurs, the exchange rate could further test the 0.8680 or even 0.8720 areas.
Furthermore, given the current lack of significant economic data to drive the market, the short-term movement of the euro against the pound is likely to be more influenced by UK political developments and changes in international oil prices. As long as the key support level of 0.8620 is not effectively broken, the overall short-term recovery structure of the euro against the pound will remain intact.
Editor's Summary : The current EUR/GBP market is balancing between "UK political risk" and "Eurozone energy pressure." The UK local election results and Prime Minister Starmer's declining approval ratings have limited further upside for the pound; meanwhile, escalating tensions in the Middle East are driving up international oil prices, putting pressure on the energy-dependent Eurozone economy. Technically, EUR/GBP has formed a double-bottom pattern around 0.8620, and the short-term recovery continues, but resistance around 0.8655 remains significant. The market will need to focus on three key areas: first, changes in the UK political situation; second, the Middle East situation and international oil price trends; and third, European economic and inflation data. Overall, EUR/GBP may maintain a slightly bullish bias in the short term, but market volatility may continue to rise.
Political uncertainty in the UK is becoming a significant factor limiting the pound's continued strength. However, in terms of short-term market sentiment, the pound has maintained some resilience despite light trading at the start of the week, which is also a key reason why the euro has failed to rebound significantly against the pound.
On the other hand, the euro has also lacked significant strong support recently. Market surveys show that after US President Trump rejected Iran's latest peace proposal, the situation in the Middle East deteriorated again, and international oil prices rose again. Brent crude oil prices climbed back above $100 , and market expectations for a short-term resumption of normal shipping in the Strait of Hormuz have cooled considerably. Since the Eurozone is highly dependent on energy imports, rising international oil prices often put pressure on the Eurozone economy. Market analysts point out that continued increases in energy prices could further push up Eurozone inflation while suppressing manufacturing and consumer demand.
Some institutions worry that if oil prices remain high, the pressure on economic growth in the Eurozone may increase further. As a net energy importer, the Eurozone is significantly more sensitive to rising international oil prices than the UK. This is one of the important reasons for the recent overall weakness of the euro. In the short term, if political pressure in the UK continues to escalate, the pound may come under renewed pressure; however, if international oil prices continue to rise, the euro may also be dragged down.
From a technical perspective, the EUR/GBP daily chart shows that the exchange rate is currently maintaining a phase of recovery. After forming a double bottom pattern in the 0.8620 area , short-term buying power has clearly strengthened. On the daily chart, the exchange rate has now risen back above the 20-day moving average, indicating that the previous bearish pressure has eased. The MACD indicator has formed a golden cross at a low level, and the red bars are gradually expanding, showing that short-term bullish momentum is recovering. The RSI indicator has risen above 50, indicating that market sentiment has gradually shifted towards neutral to bullish. The 0.8620 area currently constitutes a key support level on the daily chart; a break below this level could reopen downside potential. On the upside, the area around 0.8655 remains the first major resistance zone. If a successful break above this level occurs, the exchange rate could further test the 0.8680 or even 0.8720 areas.
Furthermore, given the current lack of significant economic data to drive the market, the short-term movement of the euro against the pound is likely to be more influenced by UK political developments and changes in international oil prices. As long as the key support level of 0.8620 is not effectively broken, the overall short-term recovery structure of the euro against the pound will remain intact.
Editor's Summary : The current EUR/GBP market is balancing between "UK political risk" and "Eurozone energy pressure." The UK local election results and Prime Minister Starmer's declining approval ratings have limited further upside for the pound; meanwhile, escalating tensions in the Middle East are driving up international oil prices, putting pressure on the energy-dependent Eurozone economy. Technically, EUR/GBP has formed a double-bottom pattern around 0.8620, and the short-term recovery continues, but resistance around 0.8655 remains significant. The market will need to focus on three key areas: first, changes in the UK political situation; second, the Middle East situation and international oil price trends; and third, European economic and inflation data. Overall, EUR/GBP may maintain a slightly bullish bias in the short term, but market volatility may continue to rise.
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