• EUR/GBP gained strong positive traction on Friday and shot back to the weekly high.
  • Stronger Eurozone CPI figures reaffirmed ECB rate hike bets and boosted the euro.
  • Cautious BOE, Brexit woes undermined the GBP and contributed to the strong move.

The EUR/GBP cross built on the overnight goodish rebound from mid-0.8500s, or a nearly two-week low and gained strong positive traction on the last day of the week. The buying interest picked up pace during the early part of the European session and pushed spot prices to the 0.8650-0.8655 region, back closer to the weekly high.

The shared currency's relative outperformance comes amid a clear signal by the European Central Bank that it would begin the rate hike cycle in June. Furthermore, a 50 bps hike in September is seen as an almost done deal and the bets were reaffirmed by stronger Eurozone consumer inflation figures released earlier this Friday.

According to the preliminary estimate published by Eurostat, the annualized Eurozone Harmonised Index of Consumer Prices (HICP) accelerated to 8.6% in June. This was well above market expectations for a rise to 8.4% from the 8.1% reported in May, which, in turn, was seen as a key factor that provided a fresh lift to the EUR/GBP cross.

On the other hand, the British pound was pressured by expectations that the Bank of England would adopt a gradual approach toward raising interest rates amid growing recession fears. Apart from this, concerns about fresh UK-EU tensions over the Northern Ireland Protocol of the Brexit agreement should act as a headwind for sterling.

The fundamental backdrop supports prospects for a further near-term appreciating move for the EUR/GBP cross. Hence, some follow-through strength towards reclaiming the 0.8700 mark, en-route the YTD peak around the 0.8720 region, remains a distinct possibility.

Technical levels to watch

EUR/GBP

Overview
Today last price 0.8656
Today Daily Change 0.0046
Today Daily Change % 0.53
Today daily open 0.861
 
Trends
Daily SMA20 0.8581
Daily SMA50 0.8524
Daily SMA100 0.8438
Daily SMA200 0.8446
 
Levels
Previous Daily High 0.862
Previous Daily Low 0.8551
Previous Weekly High 0.8641
Previous Weekly Low 0.8562
Previous Monthly High 0.8721
Previous Monthly Low 0.8486
Daily Fibonacci 38.2% 0.8577
Daily Fibonacci 61.8% 0.8594
Daily Pivot Point S1 0.8568
Daily Pivot Point S2 0.8525
Daily Pivot Point S3 0.8499
Daily Pivot Point R1 0.8637
Daily Pivot Point R2 0.8663
Daily Pivot Point R3 0.8706

 

 

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