EUR/GBP declines to 22-month low as pressure on Euro weighs
- EUR/GBP heads for 0.8400 as Euro gets forced lower by political turmoil.
- Economic figures from the EU continue to disappoint.
- A rate cut from the ECB has widened the rate differential.
EUR/GBP saw a sharp downside push on Thursday, driving the pair to a nearly two-year low near the 0.8400 handle as political and economic uncertainty weigh on the Euro (EUR). Economic data has broadly missed forecasts in both the UK and the European economic zone, but a recent rate cut from the European Central Bank (ECB) has widened the Euro’s rate differential against other major currencies.
Pan-European Industrial Production contracted -0.1% MoM in April, missing the forecast 0.2% and the previous month was revised to 0.5% from 0.6%. YoY Industrial Production alos declined by a steeper-than-expected -3.0% compared to the forecast -1.9% and the previous period’s revised -1.2%.
European Parliamentary elections swung in favor of center-right and right-leaning parties across the European Union, sparking uncertainty in European financial markets. France has been driven to snap elections that could see President Emmanuel Macron get unseated by Deputy of the French National Assembly (FNA) Marine Le Pen. Le Pen’s political rise is shaking stability in financial markets as Le Pen's National Rally party's platform of steep tax cuts and lowering of the retirement age threatens to introduce financial instability in echoes of Lizz Truss’s brief stint as the Prime Minister of the UK.
UK data remains limited this week, leaving GBP traders to wait for next week’s latest UK Consumer Price Index (CPI) inflation print. The Bank of England (BoE) also delivers its latest rate call later next week. The BoE last voted 7-to-2 to keep interest rates on hold at 5.25%.
EUR/GBP technical outlook
EUR/GBP’s backslide on Thursday marks a fresh 22-month low for the pair, sending bids tumbling towards the 0.8400 handle. Bearish flows have dragged the pair into further declines after the EUR/GBP through technical support at 0.8500, and bulls are having a difficult time hitting the brakes.
EUR/GBP is accelerating towards the downside away from the 200-day Exponential Moving Average (EMA) at 0.8581. The pair is down 3% from 2024’s opening bids, and major resistance is priced in even further down at 0.8300.
EUR/GBP daily chart
Author
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
