GBP Weakness Fuels EURGBP Pullback: Sell Rallies to 0.8700

EURGBP showed a nice pullback on board-based Pound sterling weakness. As long as support 0.8645 holds, intraday bias is bullish. Currently trading at 0.87456, it reached an intraday high of 0.87411.

UK CPI for December 2025 printed a hotter-than-expected 3.4% YoY (up from 3.2% in November and above consensus), with the annual index rising 3.26% from December 2024’s 135.10 base and core inflation holding firm at 3.2% YoY, driven by sticky food and services costs. On the flip side, the monthly reading surprised to the downside at -0.2% (versus flat ~0.0% forecast), pulling the index from 139.80 to 139.50, largely due to softer energy prices and seasonal effects, while core m/m rose a tame +0.3%. The dovish monthly softness combined with resilient annual pressures reinforces near-term BoE rate-cut pricing (February 2026 in focus), weighed on GBP/USD, left commodity FX sensitive to the energy relief, and keeps traders eyeing the upcoming NIESR Q1 GDP flash for the next forex and commodities directional clue.

Technical Analysis

The pair is currently trading above 55 and 200- EMA and 365-EMA on the 4-hour chart.

Bearish Trend Confirmation: Any break below 0.8640 confirms an intraday bearish trend. A drop to 0.8600/0.8540 is likely.

Near-Term Resistance:  The near -term resistance is around 0.8750. Any violation above will take the pair to 0.8780/0.8825/0.8865/0.8900/0.8950.

Indicator Analysis (4-hour chart)

CCI (50): Bullish

Average Directional Movement Index:  Bullish

Trading Recommendation

It is good to sell on rallies around 0.8718-20 with SL around 0.8670 for a TP of 0.8800.