- EUR/GBP gains traction for the second straight day and climbs to a nearly one-month high.
- The ECB’s hawkish outlook continues to underpin the Euro and extends support to the cross.
- The dismal UK Retail Sales data weigh on the British Pound and provide an additional lift.
The EUR/GBP cross is building on the previous day's strong positive move and gaining traction for the second successive day on Friday. The momentum extends through the first half of the European session and lifts spot prices to a nearly one-month high, around the 0.8770 region in the last hour.
A more hawkish stance adopted by the European Central Bank (ECB) on Thursday continues to underpin the shared currency, which turns out to be a key factor acting as a tailwind for the EUR/GBP cross. In fact, the ECB indicated that it will need to raise borrowing costs significantly further to tame inflation, which remains far too high and is projected to stay above the target for too long.
Adding to this, Friday's release of the better-than-expected flash Eurozone PMIs, suggesting that the economic downturn in the region eases in December, offers additional support to the Euro. The British Pound, on the other hand, is pressured by dismal domestic data, showing that Retail Sales fell again in November and fueling concerns that the economy has already entered a prolonged recession.
Apart from the aforementioned fundamental factors, sustained strength beyond a previous strong support breakpoint, around the 0.8700 mark, seems to have prompted some technical buying. any subsequent move up, however, is more likely to confront stiff resistance near the 0.8800-0.8810 supply zone. The latter should act as a pivotal point, which if cleared will be seen as a fresh trigger for bulls.
Technical levels to watch
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