EUR/GBP slides to 0.8611, testing 10-month lows in risk-off markets

EUR/GBP fell to 0.8611 on Wednesday, its weakest level in 10 months, as a broad risk-off wave swept across global markets.

EUR/GBP slid to 0.8611 on Wednesday, its weakest in 10 months, as a global risk-off move drove demand for the dollar and sterling at the euro's expense.

"The scale of the selloff reflects a wholesale repricing of risk across asset classes, with the euro bearing the brunt of the shift," said Jane Foley, senior FX strategist at Rabobank.

The pound gained 0.3% against the euro, pushing the cross to levels last seen in August 2025. The move extended a 1.4% decline over the past month, with the pair breaking below the 0.8650 support level that had held since April. The euro has weakened against all 10 major developed-market currencies this week, according to Bloomberg data.

A sustained break below 0.8600 could trigger further stop-loss selling, with the next technical support at the August 2025 low around 0.8550. The European Central Bank's policy path — markets are pricing 45 basis points of additional cuts by year-end — contrasts with the Bank of England's more cautious stance, widening the rate differential in sterling's favor.

The risk-off mood was evident across asset classes. The S&P 500 fell 1.4% in afternoon trading, while the Nasdaq Composite dropped more than 2%. The Euro Stoxx 600 closed 0.7% lower. The dollar index DXY rose to 101.4, its highest in more than a year, as investors sought the relative safety of the greenback. The 10-year US Treasury yield fell 2 basis points to 4.49%, while European rates were also modestly lower.

Flash PMI data released Tuesday underscored the divergence between the US and European economies. The US composite PMI rose to a five-month high of 52.2, driven by the manufacturing sector which hit a four-year high of 55.7. In contrast, the euro area composite remained below the 50 threshold for a third consecutive month at 49.5, while the UK composite slipped to a 14-month low of 49.4.

Rate Divergence Widens as ECB, BOE Paths Diverge

The policy outlook is compounding the euro's weakness. Markets are pricing 45 basis points of ECB rate cuts through year-end, compared with 35 basis points for the Bank of England, reflecting expectations that the euro zone economy will require more stimulus. The 10-year US Treasury yield fell 2 basis points to 4.49% on Wednesday, while European rates were also modestly lower.

Technical Levels in Focus After Breakout

The 0.8611 level represents a test of the October 2025 low, and a daily close below that mark would confirm the bearish breakout. The next support lies at 0.8550, the August 2025 trough, according to technical analysts. Resistance is now at the former support of 0.8650, with a move back above 0.8700 needed to signal a reversal.

This article is for informational purposes only and does not constitute investment advice.