- EUR/GBP falls from a 5-month high of 0.8754, currently trading at 0.8705.
- Eurozone inflation drops to 2.9% in October, while GDP for Q3 misses forecasts, contracting by 0.1%.
- The Bank of England is expected to keep rates unchanged at 5.25% on November 2, as traders priced in rate cuts towards the end of 2024.
The EUR/GBP falls from a 5-month high reached earlier in the European session, at 0.8754, but has retreated after the Eurozone’s (EU) economy contracted while inflation cooled. Therefore, speculations are mounting that the European Central Bank (ECB) might finish raising rates. The cross exchanges hands at 0.8705.
Euro loses ground against the British Pound as economic data fuels speculation that the ECB might halt its rate hikes
During the European session, the EU revealed that inflation dipped below the 3% threshold in October, according to Eurostat, with prices rising to 2.9%, below the 3.1% expected and well beneath the September 4.3% jump. Given that data justifies the ECB’s pausing rates last week, money market futures estimate the first rate cut is expected in the first half of 2024.
Nevertheless, not everything is good news for the bloc, as the Gross Domestic Product (GDP) for Q3 missed forecasts of 0%, at -0.1%. despite that, some ECB officials continued to keep the door open for additional tightening, as Joachim Nagel from the Bundesbank noted, “Our tight monetary policy is working, but we must not let up too soon.” He stated that rates need to be at a sufficiently high level for a long time.
On the UK front, the Bank of England is expected to keep rates unchanged at a 15-year high of 5.25% on November 2. Although there are signs the economy is stagnating, inflation remains three times the BoE’s target of 2%. Money markets traders are betting the BoE is done raising rate increases, with rate cuts expected towards the end of 2024.
EUR/GBP Price Analysis: Technical outlook
From a daily chart perspective, the uptrend remains intact despite dipping toward the 0.8700 figure. However, if EUR/GBP sellers drive prices below the 200-day moving average (DMA) at 0.8691, that could pave the way towards a more significant correction, with first support seen at the October 24 low of 0.8682, followed by the August 11 high of 0.8669. On the other hand, if the pair stays above 0.8700, a re-test of 0.8754 is on the cards, followed by the 0.88 handle. Up next would be the May 3 high at 0.8834.
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 clings to strong daily gains near 1.0900
EUR/USD trades at its strongest level since mid-October near 1.0900 after starting the week with a bullish gap. The uncertainty surrounding the US election outcome weighs on the US Dollar and helps the pair continue to push higher.
GBP/USD holds above 1.2950 as USD stays under pressure
GBP/USD stays in positive territory above 1.2950 after failing to clear 1.3000 earlier in the day. Heading into the US presidential election, the 10-year US Treasury bond yield is down more than 2% on the day, weighing on the USD and allowing the pair to hold its ground.
Gold trades around $2,730
Gold price is on the defensive below $2,750 in European trading on Monday, erasing the early gains. The downside, however, appears elusive amid the US presidential election risks and the ongoing Middle East geopolitical tensions.
Three fundamentals for the week: Toss up US election, BoE and Fed promise a roller coaster week Premium
Harris or Trump? The world is anxious to know the result of the November 5 vote – and may have to wait long hours for the outcome. Markets will also respond to the composition of Congress. The Bank of England and the Federal Reserve will enter the fray afterward.
US presidential election outcome: What could it mean for the US Dollar? Premium
The US Dollar has regained lost momentum against its six major rivals at the beginning of the final quarter of 2024, as tensions mount ahead of the highly anticipated United States Presidential election due on November 5.
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.