EUR/GBP rallies toward fourth straight day, hits monthly highs near 0.8650
|- Pound remains under pressure on negative UK economic outlook.
- Euro keeps rising amid expectations of a 75 rate hike from the ECB.
- EUR/GBP gains momentum after breaking key technical levels.
The EUR/GBP broke above 0.8605 and jumped to 0.8640, reaching the highest level since July 1. The cross remains near the top, with a strong bullish tone as EUR/USD breaks above 1.0050.
The euro is rising for the fourth consecutive day against the pound, accumulating a gain of more than 200 pips. The impressive rally can have more legs to go particularly if EUR/GBP holds above 0.8630. The next resistance stands at 0.8650 followed by 0.8670 and then 0.8720.
Inflation in EZ, fear in UK
Earlier on Wednesday, Eurozone inflation data showed a new record with the annual rate reaching 9.1% (above the 9% of market consensus). The numbers favored expectations of a “jumbo” rate hike of 75 basis points from the European Central Bank at next week’s meeting. Also, more ECB officials offered hawkish remarks. UK and EZ bond yields continue to rise ahead of rate hikes from central banks. European bonds are on track for their worst month ever.
In the UK, the negative economic outlook, the energy crisis and soaring inflation keep hitting the pound. The currency is about to post the biggest monthly drop versus the US dollar since October 2016.
Also weighing on GBP is the cautious tone across financial markets that usually affect the pound more than the euro. Wall Street is flat on Wednesday with main indices at the lowest level in a month while the FTSE 100 is about to end with a 0.70% decline.
Technical levels
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.