EUR/GBP extends the consolidation in the sub-0.8700 area

EUR/GBP adds to the current range bound trade.
Market sentiment remains tilted to the risk-on side.
EMU Consumer Confidence is due next in the calendar.

Pablo Piovano FXStreet

Further improvement in the appetite for the risk complex lifts EUR/GBP to the boundaries of the 0.8700 hurdle so far on Monday.

EUR/GBP: Upside appears capped by the 200-day SMA

EUR/GBP moves to 2-day highs and jabs with the critical 0.8700 mark toward the start of the week, a region coincident with the 200-week SMA. Taking a look at the weekly chart, EUR/GBP begins the new trading week with gains after five sequential pullbacks.

Additionally, the cross contributes to the recent marginal advance while remaining well within the multi-session consolidative mood below the 200-day SMA, which is currently near 0.8740.

After it appears that a recession has been avoided on both sides of the Channel, the cross continues to closely monitor developments from the ECB and the BoE as well as the outlook for both economies.

Up until this point, the hawkish views from both central banks support the notion that extra tightening seems the most probable situation in the following month.

EUR/GBP key levels

The cross is gaining 0.08% at 0.8686 and faces the next resistance level at 0.8743 (200-day SMA) followed by 0.8834 (monthly high May 3) and then 0.8875 (monthly high April 25). On the other hand, the breakdown of 0.8661 (2023 low May 11) would expose 0.8547 (monthly low December 1 2022) and finally 0.8386 (weekly low August 17 2022).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD drops to daily lows near 1.1630

EUR/USD now loses some traction and slips back to the area of daily lows around 1.1630 on the back of a mild bounce in the US Dollar. Fresh US data, including the September PCE inflation numbers and the latest read on December consumer sentiment, didn’t really move the needle, so the pair is still on course to finish the week with a respectable gain.

GBP/USD trims gains, recedes toward 1.3320

GBP/USD is struggling to keep its daily advance, coming under fresh pressure and retreating to the 1.3320 zone following a mild bullish attempt in the Greenback. Even though US consumer sentiment surprised to the upside, the US Dollar isn’t getting much love, as traders are far more interested in what the Fed will say next week.

Gold makes a U-turn, back to $4,200

Gold is now losing the grip and receding to the key $4,200 region per troy ounce following some signs of life in the Greenback and a marked bounce in US Treasury yields across the board. The positive outlook for the precious metal, however, remains underpinned by steady bets for extra easing by the Fed.