EUR/GBP falls sharply to near 0.8600 ahead of UK CPI data

EUR/GBP drops swiftly to near 0.8600 ahead of UK Inflation data.
BoE Broadbent warned that higher wage growth could keep interest rates higher for a longer period.
ECB Villeroy signalled that the rate-tightening regime has come to an end.

Sagar Dua FXStreet

The EUR/GBP pair corrects sharply to near the round-level support of 0.8600 in the late European session. The cross faces a sell-off as investors hope that the Bank of England (BoE) will stick to tight interest rates due to higher wage growth.

UK’s labour cost index is consistently falling due to declining demand for workforce amid higher interest rates by the BoE. In spite of easing wage growth each month, pay hikes are higher than what required to bring down the underlying inflation to 2%.

BoE Deputy Governor Ben Broadbent said on Monday that higher wage growth could allow the central bank to keep interest rates in the restrictive territory for a longer period. In the monetary policy announcement, BoE Governor Andrew Bailey emphasized on keeping interest rates higher for sufficiently longer to ensure the achievement of price stability.

Meanwhile, investors await the UK Consumer Price Index (CPI) data for November, which will be published on Wednesday at 07:00 GMT. As per the consensus, monthly headline inflation grew by 0.2% after remaining stagnant in October. The annual headline and core inflation are seen easing to 4.4% and 5.6% respectively.

More-than-anticipated decline in the UK price pressures would escalate discussions about rate cuts by the BoE sooner in 2024.

On the Eurozone front, interest rates by the European Central Bank (ECB) are seen reaching to an end amid a significant decline in inflation. ECB Villeroy signalled that the rate-tightening regime has concluded now and rate cuts are expected at some time in 2024.

EUR/GBP

Overview
Today last price	0.8602
Today Daily Change	-0.0032
Today Daily Change %	-0.37
Today daily open	0.8634

Trends
Daily SMA20	0.8622
Daily SMA50	0.8669
Daily SMA100	0.8638
Daily SMA200	0.8662

Levels
Previous Daily High	0.8646
Previous Daily Low	0.8592
Previous Weekly High	0.8634
Previous Weekly Low	0.8549
Previous Monthly High	0.8766
Previous Monthly Low	0.8614
Daily Fibonacci 38.2%	0.8626
Daily Fibonacci 61.8%	0.8613
Daily Pivot Point S1	0.8602
Daily Pivot Point S2	0.857
Daily Pivot Point S3	0.8548
Daily Pivot Point R1	0.8656
Daily Pivot Point R2	0.8679
Daily Pivot Point R3	0.8711

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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