EUR/GBP drops to weekly lows near 0.8870

The upside bias in the British pound weighs on EUR/GBP and drags it to weekly lows near 0.8870 on Wednesday.

EUR/GBP weaker on GBP recovery

EUR/GBP retreats for the third session in a row midweek and extend the offered bias following recent 5-month peaks near 0.8980 (February 3).

Indeed, the recent sharp decline in the European currency, particularly in the wake of the US NFP results, put the cross under heavy downside pressure and sponsored the ongoing drop to 4-day lows.

Moving forward, the next steps from both the ECB and the BoE are expected to drive the price action around the cross as well as the progress of the Fed’s normalization process.

So far, the ECB has already anticipated a 25 bps rate hike in March, while investors also appear to lean towards a similar rate hike by the “Old Lady” following the bank’s more optimistic projections unveiled at the latest gathering.

EUR/GBP key levels

The cross is losing 0.15% at 0.8889 and the breakdown of 0.8758 (55-day SMA) would expose 0.8721 (2023 low January 19) and finally 0.8636 (200-day SMA). On the other hand, the next up barrier emerges at 0.8978 (2023 high February 3) followed by 0.9000 (round level) and then 0.9277 (2022 high September 26).