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.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.