EUR/GBP tumbles to weekly lows below 0.8800 as Euro sinks

The EUR/GBP is losing more than 50 pips, having the worst day in at least two months. Recently it hits levels under 0.8800 for the first time in a week.

The cross broke below 0.8830 and accelerated the downside. It bottomed at 0.8792 and remains near the lows, under pressure as the Euro tumbles.

ECB contemplating a lower path?

Bloomberg reported that “European Central Bank policymakers are starting to consider a slower pace of interest rate hikes” after a 50 basis points hike in February, “according to officials with knowledge of their discussions.”

The report triggered a decline of the Euro across the board with EUR/USD falling from near 1.0870 to levels under 1.0800. The common currency is the worst performer of the American session.

The Pound was already trading higher versus the Euro, supported by better-than-expected UK economic data. The unemployment rate remains unchanged at 3.7% in November while average weekly earnings, excluding bonuses, arrived at 6.4% in 3Mo/YoY in November versus 6.1% of the previous month and the 6.3% expected. On Wednesday, the UK will report the Consumer Price Index. The headline is expected at 10.6% (annual) in December down from 10.7% in November.

 Technical outlook

The EUR/GBP is falling after facing resistance at the 0.8900 level and with the current bearish acceleration, it could test the next crucial support around 0.8770/75, that is the bottom of the recent range.

Technical indicators are turning south and could point to furthers losses if current levels are confirmed. The cross is back below the 20-day Simple Moving Average that stands at 0.8820. A recovery back above 0.8830 would alleviate the bearish pressure. A daily close above 0.8900 would open the doors to more gains.

Technical levels