- EUR/GBP gained some positive traction on Tuesday and inched back closer to the YTD peak.
- The BoE’s gloomy economic outlook continued weighing on sterling and acted as a tailwind.
- Concerns about looming recession undermined the euro and capped any meaningful upside.
The EUR/GBP cross held on to its modest intraday gains, around the 0.8570 region through the first half of the European session and had a rather muted reaction to the German data.
The cross attracted some dip-buying near the 0.8545 zone on Tuesday and has now moved well within the striking distance of the YTD peak touched last week. The Bank of England's warning last week, saying that the economy was at the risk of a recession, suggested that the current rate hike cycle could be nearing a pause. This was seen as a key factor behind the British pound's relative outperformance and acted as a tailwind for the EUR/GBP cross.
That said, concerns that the European economy will suffer the most from the Ukraine crisis held back bullish traders from placing aggressive bets around the shared currency. On the economic data front, the German ZEW Economic Sentiment Index improved from -41.0 in April to -34.3 for the current month, beating estimates of -42.0 by a wide margin. This, however, did little to offset worries about the looming recession or provide any impetus to the EUR/GBP cross.
From a technical perspective, the post-BoE strong move up beyond the very important 200-day SMA and a descending trend-line extending from April 2021 support prospects for additional gains. Hence, some follow-through strength, towards reclaiming the 0.8600 mark for the first time since October 2021, still looks like a distinct possibility. That said, absent relevant market-moving economic releases warrant some caution before positioning for any further gains.
Technical levels to watch
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: The hunt for the 0.7000 hurdle
AUD/USD quickly left behind Wednesday’s strong pullback and rose markedly past the 0.6900 barrier on Thursday, boosted by news of fresh stimulus in China as well as renewed weakness in the US Dollar.
EUR/USD refocuses its attention to 1.1200 and above
Rising appetite for the risk-associated assets, the offered stance in the Greenback and Chinese stimulus all contributed to the resurgence of the upside momentum in EUR/USD, which managed to retest the 1.1190 zone on Thursday.
Gold holding at higher ground at around $2,670
Gold breaks to new high of $2,673 on Thursday. Falling interest rates globally, intensifying geopolitical conflicts and heightened Fed easing bets are the main factors.
Bitcoin displays bullish signals amid supportive macroeconomic developments and growing institutional demand
Bitcoin (BTC) trades slightly up, around $64,000 on Thursday, following a rejection from the upper consolidation level of $64,700 the previous day. BTC’s price has been consolidating between $62,000 and $64,700 for the past week.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.