- Pound gains ground as BoE boosts rates; EUR/GBP pair hits 0.8566, sparking recession concerns.
- The technical outlook suggests a prolonged EUR/GBP downtrend as cross falls below the 20-day EMA.
- Buyers eye EUR/GBP recovery above 0.8600; the critical hurdle lies at 50-day EMA at 0.8657.
The EUR/GBP dropped for the second straight day following Thursday’s Bank of England (BoE) monetary policy decision to raise rates by 50 basis points (bps) which bolstered the Pound Sterling (GBP) against the Euro (EUR). In addition, a deceleration in business activity in the Eurozone (EU) and the UK increased recession fears. Still, upbeat retail sales in the UK exacerbated a leg-down in the EUR/GBP. At the time of writing, the EUR/GBP exchanges hands at 0.8566 after hitting a high of 0.8607.
EUR/GBP Price Analysis: Technical outlook
Given the fundamental backdrop, the EUR/GBP is set to extend its downtrend. Also, the pair crossed below the 20-day Exponential Moving Average (EMA) at 0.8593, a bearish signal that exacerbated the cross fall toward daily lows reached at around 0.8535 before stabilizing at current exchange rates.
Sellers will need the EUR/GBP printing a daily close below the June 22 daily low of 0.8569 to cement the downtrend. That would put at risk support levels like the current two-day low of 0.8535, followed by the weekly low of 0.85255, before challenging the year-to-date (YTD) low of 0.8518.
Otherwise, EUR/GBP buyers would remain hopeful of cracking the 0.8600 figure, though firstly, they need to conquer the 20-day EMA. Upside risks above the 0.86 figure lie at a June 22 high of 0.8639, with buyers eyeing the 50-day EMA as the next ceiling level at 0.8657.
EUR/GBP Price Action – Daily chart
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
EUR/USD trades on the back foot near 1.0600
EUR/USD is trading near 1.0600 in Tuesday's European trading hours, finding fresh sellers amid a pause in the US Dollar corrective decline. The pair remains cautious amid increased dovish ECB rate cut bets and geopolitical risks. ECB and Fed policymakers' speeches eyed.
GBP/USD struggles below 1.2700, awaits Bailey's testimony
GBP/USD struggles below 1.2700 in European trading on Tuesday, lacking a bullish conviction amid a steady US Dollar and as investors opt to wait for the Bank of England's (BoE) Monetary Policy Report Hearings before placing aggressive directional bets.
Gold price consolidates intraday gains to one-week high amid mixed cues
Gold price (XAU/USD) trims a part of its modest intraday gains to a one-week top and trades around the $2,620 level during the first half of the European session on Tuesday, still up for the second straight day.
Canada CPI expected to rise 1.9% in October, bolstering BoC to further ease policy
The Canadian Consumer Price Index is seen ticking higher by 1.9% YoY in October. The Bank of Canada has reduced its policy rate by 125 basis points so far this year. The Canadian Dollar navigates multi-year lows against its American counterpart.
The week ahead: Powell stumps the US stock rally as Bitcoin surges, as we wait Nvidia earnings, UK CPI
The mood music is shifting for the Trump trade. Stocks fell sharply at the end of last week, led by big tech. The S&P 500 was down by more than 2% last week, its weakest performance in 2 months, while the Nasdaq was lower by 3%. The market has now given back half of the post-Trump election win gains.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.