EUR/GBP slips as strong PMIs cancel out and Iran signals de-escalation

Flash Purchasing Managers Index (PMI) surveys beat forecasts in both the Eurozone and the United Kingdom.
German manufacturing led the beat at a multi-year high, but German services slipped back into contraction, keeping the Euro mixed.
Iranian President Masoud Pezeshkian said Iran wants to end its conflict with the US now.

Agustin Wazne FXStreet

The Euro (EUR) is falling against the British Pound (GBP). EUR/GBP held the mid-0.8500s on Friday, hovering just below the 0.8570 area, even after a strong round of August flash Purchasing Managers Indexes (PMIs) on both sides of the cross. The reaction was muted for a simple reason: the data was good for both currencies.

The Eurozone composite PMI rose to a nine-month high, with Manufacturing the standout. German factory activity hit its highest level in more than four years. The soft spot was German Services, which slipped back below the 50 line that separates growth from contraction, keeping the Euro's read mixed. In the UK, the composite also beat, driven by Services, while Manufacturing eased broadly in line. Weaker-than-expected UK Retail Sales did little to dent Sterling.

Iranian President Masoud Pezeshkian said on Friday that Iran wants to end its conflict with the US now, "from a position of strength", with the world acknowledging "its victory". Speaking at the Islamic Medical Association's assembly, he said those who "sit across the border and invite the enemy to invade" the country are "not Iranians". The tone points to de-escalation, and it is the Middle East risk backdrop, more than the growth surveys, that has kept European currencies on a tight leash this week.

Technical analysis:

In the 4-hour chart, EUR/GBP trades at 0.8563, capped by the 20-period Simple Moving Average (SMA) at 0.8566 and a dense band of nearby resistance, which keeps the short-term bias slightly bearish despite the pair holding just above the 100-period SMA at 0.8559. The Relative Strength Index (RSI 14) around 49 suggests neutral momentum, reinforcing the view of a capped market rather than a directional breakout.

On the topside, immediate resistance is clustered at 0.8565 and the 20-period SMA at 0.8566, followed by higher hurdles at 0.8571 and 0.8576. On the downside, the horizontal line at 0.8563 acts as a pivotal level currently being tested, with the 100-period SMA at 0.8559 providing the next layer of support if sellers regain control.

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

Author

Agustin Wazne

FXStreet

Agustin Wazne joined FXStreet as a Junior News Editor, focusing on Commodities and covering Majors.

AUD/USD holds above 0.6950 as bullish USD caps gains

AUD/USD edges lower during the Asian session on Tuesday, stalling a two-day recovery move from a two-month low, touched last week. An extended rout in the fixed income market keeps US bond yields elevated near multi-year highs. This, along with geopolitical uncertainties, helps the US Dollar retain its bullish tone despite receding October Fed hike bets. However, expectations for another RBA rate hike this month could act as a tailwind for the Aussie.

USD/JPY remains confined in a range; 158.00 holds the key

USD/JPY extends its consolidative move during the Asian session on Tuesday, trading below 158.00 amid diverging forces. Hawkish BoJ expectations support the Japanese Yen amid looming intervention risks. Meanwhile, geopolitical uncertainty and elevated US bond yields keep the US Dollar near its YTD high despite receding October Fed hike bets. This, in turn, holds back traders from placing aggressive directional bets.

Gold holds steady below $4,150 as receding Fed hike bets lend support

Gold continues its struggle to gain any meaningful traction, holding steady below $4,150 during the Asian session on Tuesday. Receding October Fed hike bets act as a tailwind for the non-yielding bullion, though a bullish US Dollar caps the upside. Furthermore, traders await the release of the FOMC Minutes on Wednesday for more cues about the future policy path and some meaningful impetus.

Ethereum: BitMine scoops extra ETH tokens following Q3 outperformance

Ethereum (ETH) treasury firm BitMine Immersion continued its buying streak of the top altcoin last week. The firm acquired 15,112 ETH, lifting its holdings to 6.016 million ETH, representing 4.9% of ETH's circulating supply and worth $16.16 billion at the time of writing. That brings the company roughly 98.5% closer to acquiring 5% of ETH's supply, a goal it tags "Alchemy of 5%."

Markets just priced out rate hikes on financial stress. This chart shows why 2022-23 says they’ll be wrong

Traders have taken about one quarter-point hike out of their European Central Bank forecasts since mid-September, betting the ECB will stop raising rates because of a French debt selloff. The same bet failed twice in 2022 and 2023, when the ECB kept raising rates through financial stress because inflation was above its 2% target. Euro-area inflation came in at 3.8% in September.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.