EUR/GBP breakdown signals euro weakness beyond dollar strength

Long-dated Treasury yields have climbed to multi-decade highs, making it tempting to attribute most of EUR/USD's recent struggles to a stronger dollar. However, the euro may be developing its own weakness narrative. Developments in EUR/GBP could provide traders with an additional clue in that regard.

The currency pair has faced sustained pressure in recent weeks, dropping to its lowest level since June last year. France's ongoing fiscal difficulties continue to unsettle European bond markets, making it increasingly hard to dismiss the possibility that traders are beginning to factor in euro-specific risks.

A strong hint of this emerged with EUR/CHF acting as another barometer of Europe's fiscal risks. The franc's safe-haven status does complicate that picture somewhat. Still, the weakness in EUR/GBP adds another dimension to the argument.

The weekly chart for the pair is beginning to look quite concerning.

The neckline break around the 0.8620 level in early July served as an early warning. That break initially caused a brief decline below 0.8500 before buyers returned, with the 61.8 Fib retracement near 0.8467 helping to support the rebound.

Now sellers are threatening another break lower, pushing back below 0.8500 this week to test fresh lows since June 2025.

The July low at 0.8454 is still holding for now. However, a sustained move below 0.8500, particularly a break of the support zone around 0.8454-67, would strengthen the bearish technical outlook and potentially open the way toward 0.8300.

On the upside, the near-term chart shows that technical resistance for a recovery is not far off, with the 100-hour moving average (red line) at 0.8485 and the 200-hour moving average (blue line) at 0.8523. Between those levels, buyers must also clear the 0.8500 hurdle to suggest a more meaningful rebound.

While the focus is largely on the euro side, there is an important caveat: the UK is not a picture of fiscal health either. UK borrowing costs have also risen sharply, and the upcoming 28 October budget presents another potential headache for sterling.

BOE and ECB rate expectations also play a role here. So not every decline in EUR/GBP can be blamed on France's fiscal troubles.

But when both the EUR/GBP and EUR/CHF charts are flashing warning signals alongside EUR/USD, it is worth considering whether the market is beginning to view the euro as more than just the counterpart to a stronger dollar. For now, there is little reassurance to be found.