EUR/GBP retreats as stick Eurozone inflation supports more interest rate hikes


  • EUR/GBP falls back as expectations of more interest rates from the ECB threaten the economic outlook.
  • Eurozone inflation expanded in August due to the hot labor market.
  • Two more interest rate hikes of bps from the BoE are expected this year as investors see the interest rate peak at 5.75%.

The EUR/GBP pair falls back as a pullback move to near 0.8570 meets offers in the European session. The cross continues to bleed as investors hope that the European Central Bank (ECB) has to raise interest rates further so that inflation can be tamed and the trading bloc can avoid potential risks of a recession.

Eurozone preliminary Harmonized Index of Consumer Prices (HICP) for August expanded as the labor market remained hot, making it difficult for policymakers to convince workers to shift to slower wage growth.

Eurostat reported that monthly headline inflation expanded at a higher pace of 0.6% while investors anticipated a deflation of 0.1% as recorded for July. Core inflation that excludes volatile food and oil prices expanded at a 0.3% pace as expected by market participants. In July prices of core goods were softened by 0.1%. On an annual basis, the economic data softened to 5.3% as expected from July’s reading of 5.5%.

About the interest rate outlook, ECB policymaker Francois Villeroy de Galhau said the central bank is open to various options at the next and upcoming rate meetings. He further added keeping rates high long enough matters more than the level.

Meanwhile, the Pound Sterling remains in the driving seat as more interest rate hikes from the Bank of England (BoE) cannot be ruled out. Two more interest rate hikes of 25 basis points (bps) are expected this year as investors see the interest rate peak at 5.75%.

On the economic front, S&P Global reported the Manufacturing PMI for August at 43.0, higher than expectations and July’s reading of 42.5.

EUR/GBP

Overview
Today last price 0.8558
Today Daily Change 0.0002
Today Daily Change % 0.02
Today daily open 0.8556
 
Trends
Daily SMA20 0.8582
Daily SMA50 0.8585
Daily SMA100 0.8638
Daily SMA200 0.8714
 
Levels
Previous Daily High 0.8598
Previous Daily Low 0.8555
Previous Weekly High 0.8586
Previous Weekly Low 0.8493
Previous Monthly High 0.8669
Previous Monthly Low 0.8493
Daily Fibonacci 38.2% 0.8572
Daily Fibonacci 61.8% 0.8582
Daily Pivot Point S1 0.8541
Daily Pivot Point S2 0.8527
Daily Pivot Point S3 0.8498
Daily Pivot Point R1 0.8584
Daily Pivot Point R2 0.8613
Daily Pivot Point R3 0.8627

 

 

Share: Feed news

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


Recommended content

Editors’ Picks

EUR/USD recovers toward 1.0500 after mixed US PMI data

EUR/USD recovers toward 1.0500 after mixed US PMI data

EUR/USD rebounds toward 1.0500 in the American session on Friday after the data from the US showed that the business activity in the private sector expanded at a softer pace than anticipated in early February. The pair remains on track to end the week with little changed.

EUR/USD News
GBP/USD rises above 1.2650, looks to post weekly gains

GBP/USD rises above 1.2650, looks to post weekly gains

GBP/USD regains its traction and trades above 1.2650 in the second half of the day on Friday. The data from the US showed that the S&P Global Services PMI dropped into the contraction territory below 50 in February, causing the US Dollar to lose strength and helping the pair edge higher.

GBP/USD News
Gold holds above $2,930 as US yields edge lower

Gold holds above $2,930 as US yields edge lower

Gold holds above $2,930 after correcting from the record-high it set above $2,950 on Thursday. Following the mixed PMI data from the US, the benchmark 10-year US Treasury bond yield stays in negative territory below 4.5% and allows XAU/USD to hold its ground.

Gold News
Crypto exchange Bybit hacked for $1.4 billion worth of ETH

Crypto exchange Bybit hacked for $1.4 billion worth of ETH

Following a security breach first spotted by crypto investigator ZachXBT, crypto exchange Bybit announced that it suffered a hack where an attacker compromised one of its ETH wallets.

Read more
Money market outlook 2025: Trends and dynamics in the Eurozone, US, and UK

Money market outlook 2025: Trends and dynamics in the Eurozone, US, and UK

We delve into the world of money market funds. Distinct dynamics are at play in the US, eurozone, and UK. In the US, repo rates are more attractive, and bills are expected to appreciate. It's also worth noting that the Fed might cut rates more than anticipated, similar to the UK. In the eurozone, unsecured rates remain elevated.

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Forex MAJORS

Cryptocurrencies

Signatures

Best Brokers of 2025