- EUR/GBP gains strong positive traction on Wednesday and rallies to over a one-week high.
- The stronger inflation figures from the Eurozone’s three biggest economies boost the Euro.
- A modest pickup in demand for the British Pound does little to hinder the strong move up.
The EUR/GBP cross catches aggressive bids on Wednesday and builds on the previous day's bounce from the vicinity of the 100-day SMA support near the 0.8755-0.8750 region, or a one-month low. The strong move up remains uninterrupted through the mid-European session and lifts spot prices to over a one-week top, around the 0.8875-0.8880 region in the last hour.
The shared currency's relative outperformance comes amid rising bets for additional jumbo interest rate hikes by the European Central Bank (ECB) in the coming months. The expectations were lifted by signs of rebounding inflation in France, Spain and Germany - the Eurozone's three biggest economies. This, in turn, lifts the yield on Germany’s rate-sensitive two-year bond to its highest level since the 2008 financial crisis.
Apart from this, a sharp US Dollar pullback from a multi-week high further boosts the Euro and provides a goodish lift to the EUR/GBP cross. A weaker Greenback, meanwhile, also benefits the British Pound, which remains supported by the latest optimism over the UK-EU agreement on the new Northern Ireland protocol. Adding to this, speculations for additional rate hikes by the Bank of England (BoE) could cap gains for the cross.
From a technical perspective, the EUR/GBP bulls have been showing resilience near the 100-day SMA and the subsequent move-up supports prospects for additional gains. Hence, some follow-through strength, back towards reclaiming the 0.8900 mark, now looks likely a distinct possibility. The momentum could get extended towards the 0.8950-0.8955 intermediate hurdle en route to the YTD peak, around the 0.8980 zone touched in February.
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
GBP/USD struggles around 1.2600 after BoE rate decision
GBP/USD retreated from its daily peak and battles around 1.2600 following the Bank of England monetary policy decision. The BoE kept the benchmark interest rate unchanged at 4.75% as expected, but the accompanying statement leaned to dovish. Three out of nine MPC members opted for a cut.
EUR/USD retakes 1.0400 amid the post-Fed recovery
EUR/USD is recovering ground to near 1.0400 in the European session on Thursday. The pair corrects higher, reversing the hawkish Fed rate cut-led losses. Meanwhile, the US Dollar takes a breather ahead of US data releases.
Gold price recovers from one-month low, retains modest gains above $2,600
Gold price attracts some haven flows in the wake of the post-FOMC sell-off in the equity markets. The Fed’s hawkish outlook lifts US bond yields and provides near-term support to XAU/USD. Market players await US GDP and employment-related data.
Aave Price Forecast: Poised for double-digit correction as holders book profit
Aave (AAVE) price hovers around $343 on Thursday after correcting more than 6% this week. The recent downturn has led to $5.13 million in total liquidations, 84% of which were from long positions.
Fed-ECB: 2025, the great decoupling?
The year 2024 was marked by further progress in disinflation in both the United States and the Eurozone, sufficient to pave the way for rate cuts. The Fed and the ECB did not quite follow the same timetable and tempo, but by the end of the year, the cumulative size of their rate cuts is the same: 100 basis points.
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.