- EUR/GBP trades in positive territory for the fourth consecutive day around 0.8575 in Tuesday’s early European session.
- German Factory Orders climbed 3.9% MoM in June vs. -1.6% prior, better than expected.
- BoE’s Bailey said the central bank must be careful about further rate cuts, while investors bet on more rate cuts before year-end.
The EUR/GBP cross extends the rally near 0.8575 during the early European session on Tuesday. The uptick of the Euro (EUR) is bolstered by the recent upbeat German economic data. Traders will take more cues from the Eurozone June Retail Sales for June, which is due later on Tuesday.
The stronger-than-expected German Factory Orders contribute to the shared currency’s further upside. Data released by the Federal Statistics Office showed on Tuesday that the country’s Factory Orders jumped 3.9% MoM in June from a fall of 1.6% in May. This figure was above the market consensus of 0.8%.
The Eurozone June Retail Sales are expected to increase 0.1% YoY in June. If the retail sector in the Eurozone shows improvement, this could lift the Euro (EUR) against the Pound Sterling (GBP). On the other hand, the downbeat outcome might trigger the potential European Central Bank (ECB) interest rate cuts in September, which might drag the shared currency lower.
On the GBP’s front, the Bank of England (BoE) decided to cut its interest rates by 25 basis points (bps) to 5% last week. BoE governor Andrew Bailey noted that the rate decision will be decided "from meeting to meeting," but market players expect the UK central bank will deliver more rate cuts in September, with the chance of a move at its next meeting in September seen as a nearly 55% probability.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Further consolidation remains in place
AUD/USD set aside Wednesday’s small gains and resumed its downtrend, always against the backdrop of the multi-week consolidative range in place since mid-April. So far, the pair remains supported by the 0.6400 region, while the upside appears capped by the 0.6500 region.
EUR/USD: Bullish attempts lack colour
EUR/USD reversed three consecutive daily advances, returning to the 1.1250 zone following weekly peaks in the 1.1360-1.1370 band. The correction in spot came in response to the resurgence of the bid bias in the US Dollar, particularly underpinned by better-than-expected US business activity measures.
Gold battles to retain the $3,300 mark
Gold now seems to have embarked on a daly consolidative phase around the $3,300 mark per troy ounce amid the firm performance of the Greenback. However, a cautious market mood is helping to limit the downside for the precious metal.
Why Bitcoin is not equal to Gold
On March 6, 2025, U.S. President Donald Trump signed an executive order establishing a strategic Bitcoin reserve and digital asset stockpile for the United States government.
FOMO vs fundamentals: Retail buys the dip, institutional investors stay cautious
Retail optimism is rising, but institutions are still treading carefully amid lingering macro and earnings risks. Policy and fiscal uncertainty remain elevated, with trade tensions, U.S. debt concerns, and a cautious Fed dominating the backdrop.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.