EUR/GBP falls to nine-month lows below 0.8550


  • EUR/GBP falls to a 9-month low as ECB approaches its peak rate and the BoE is ready to continue tightening.
  • The pair signals oversold conditions on the daily chart for the first time since 2021.
  • Weak economic data from Italy and Germany contribute to Euro's decline..

The EUR/GBP pair has recently witnessed a substantial decline, falling to a nine-month low at 0.8540 and stabilizing around 0.8545. This prolonged downward trend reflects the difficulties faced by the Euro amid the economic downturn in the Eurozone. However, there is some optimism for the British economy as the Bank of England's projections indicate that the United Kingdom is likely to steer clear of a recession. Furthermore, the fact that inflation in the UK is running high is fueling hawkish bets on the Bank of England (BoE), giving additional support to the Sterling.

German yields decline on weak economic data

The National Institute of Statistics from Italy released that Italian Industrial output decreased by 1.9% in April vs the 0.1% expansion expected from its previous figure which also showed a contraction of -0.6%. On a yearly basis, the output is now down 7.2%. Adding to that, the EZ reported weak final revisions of Q1 Gross Domestic Product (GDP) on Thursday while Germany (the most important economic block from the EZ) goes through a technical recession.

The German yields weakened across the curve on Friday. The 10-year bond yield fell to 2.37% while the 2-year yield sits at 2.96% and the 5-year at 2.42%. In addition, the German DAX  stock index closed this week with 0.60 % losses indicating a negative sentiment towards de economic activity in Germany and hence applying selling pressure on the Euro.

For the upcoming European Central Bank (ECB) decision next week, markets are foreseeing a 25 basis point (bps) rate hike announcement and another one in either July or September. For the BoE market participants are anticipating a 100 bps hike to 5.50% for the remained of the tightening cycle.

EUR/GBP levels to watch

According to the daily chart, the EUR/GBP holds a bearish outlook for the short term as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) both suggest that the sellers have control while the pair trades below its main moving averages.

In case the pair faces further downside, support levels line up at the multi-year low at 0.8540 and below around the 0.8535 zone and the 0.8520 level. Conversely, in case the EUR/GBP regains traction, the following resistance lineup at the 0.8560 zone followed by 0.8580 (June 7 low) and the 0.8600 psychological mark.

EUR/GBP daily chart 

 

EUR/GBP

Overview
Today last price 0.8543
Today Daily Change -0.0041
Today Daily Change % -0.48
Today daily open 0.8584
 
Trends
Daily SMA20 0.8655
Daily SMA50 0.8735
Daily SMA100 0.8784
Daily SMA200 0.8755
 
Levels
Previous Daily High 0.8614
Previous Daily Low 0.8583
Previous Weekly High 0.8695
Previous Weekly Low 0.8568
Previous Monthly High 0.8835
Previous Monthly Low 0.8583
Daily Fibonacci 38.2% 0.8595
Daily Fibonacci 61.8% 0.8602
Daily Pivot Point S1 0.8574
Daily Pivot Point S2 0.8563
Daily Pivot Point S3 0.8543
Daily Pivot Point R1 0.8604
Daily Pivot Point R2 0.8625
Daily Pivot Point R3 0.8635

 

 

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