• EUR/GBP shot to over a one-week high on Thursday, though the uptick lacked bullish conviction.
  • The disappointing release of the Eurozone PMIs weighed on the euro and acted as a headwind.
  • Dovish BoE expectations continued undermining sterling and supports prospects for further gains.

The EUR/GBP cross gained some follow-through traction on Thursday and climbed to over a one-week high, around the 0.8640 region during the early European session. Spot prices, however, lost steam and retreated to the 0.8625 area in reaction to the disappointing release of the Eurozone PMI prints.

The preliminary report from S&P Global/BME research showed that the French economy recorded a notable slowdown in growth at the end of the second quarter. Adding to this, the latest flash PMI data showed a sharp loss of momentum in the German economy in June. This fueled worries over a possible recession, which might derail the European Central Bank's plan to tighten its monetary policy.

Doubts that the ECB will keep hiking interest rates further in the month ahead turned out to be a key factor that undermined the shared currency and capped gains for the EUR/GBP cross. That said, the British pound's relative underperformance, led by expectations that the Bank of England would opt for a more gradual approach towards raising interest rates, acted as a tailwind for spot prices.

Apart from this, the UK-EU impasse over the Northern Ireland Protocol of the Brexit agreement might continue to weigh on sterling and supports prospects for a further near-term appreciation for the EUR/GBP cross. Market participants now look forward to the flash version of the UK PMI prints for a fresh impetus. Nevertheless, the fundamental backdrops favour bulls, suggesting that any meaningful pullback could be seen as a buying opportunity and is more likely to remain limited.

Technical levels to watch

EUR/GBP

Overview
Today last price 0.863
Today Daily Change 0.0013
Today Daily Change % 0.15
Today daily open 0.8617
 
Trends
Daily SMA20 0.8554
Daily SMA50 0.8485
Daily SMA100 0.8428
Daily SMA200 0.8444
 
Levels
Previous Daily High 0.8625
Previous Daily Low 0.8575
Previous Weekly High 0.8721
Previous Weekly Low 0.8512
Previous Monthly High 0.8619
Previous Monthly Low 0.8367
Daily Fibonacci 38.2% 0.8606
Daily Fibonacci 61.8% 0.8594
Daily Pivot Point S1 0.8586
Daily Pivot Point S2 0.8555
Daily Pivot Point S3 0.8536
Daily Pivot Point R1 0.8636
Daily Pivot Point R2 0.8656
Daily Pivot Point R3 0.8686

 

 

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