- 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 stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.