- EUR/GBP regains positive traction on Thursday and climbs back closer to the overnight swing high.
- The BoE’s gloomy outlook is seen as a key factor behind the British pound’s underperformance.
- The post-US CPI USD weakness benefits the euro and remains supportive of the intraday move up.
The EUR/GBP cross catches fresh bids on Thursday and prolongs its intraday positive move through the first half of the European session. The momentum pushes spot prices back above mid-0.8400s in the last hour, closer to over a two-week high touched the previous day.
The back of the Bank of England's gloomy outlook continues to act as a key factor behind the British pound's relative underperformance and offers some support to the EUR/GBP cross. It is worth recalling that the UK central bank painted a particularly bleak picture last week and warned that a prolonged economic recession would start in the fourth quarter.
The shared currency, on the other hand, draws some support from the softer US CPI-induced US dollar weakness. This provides an additional lift to the EUR/GBP cross and contributes to the intraday positive move. That said, Europe's energy supply concerns, which could drag the Eurozone economy faster and deeper into recession, could cap gains for the cross.
In the latest development, the supply of Russian oil to three European countries through Ukraine was suspended as Western sanctions prevented the latter from accepting transit fees. This makes it prudent to wait for strong follow-through selling before confirming that the EUR/GBP cross has formed a near-term bottom and positioning for any further appreciating move.
There isn't any major market-moving economic data due for release on Thursday, either from the Eurozone or the UK. Hence, the market focus now shifts to the Preliminary UK Q2 GDP report, due for release on Friday. The data would play a key role in influencing the near-term sentiment surrounding sterling and provide a fresh directional impetus to the EUR/GBP cross.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.