EUR/GBP rallies to over one-week high, eyes 0.8900 amid bets for jumbo ECB rate hikes

EUR/GBP gains strong positive traction on Wednesday and rallies to over a one-week high.
The stronger inflation figures from the Eurozone’s three biggest economies boost the Euro.
A modest pickup in demand for the British Pound does little to hinder the strong move up.

Haresh Menghani FXStreet

The EUR/GBP cross catches aggressive bids on Wednesday and builds on the previous day's bounce from the vicinity of the 100-day SMA support near the 0.8755-0.8750 region, or a one-month low. The strong move up remains uninterrupted through the mid-European session and lifts spot prices to over a one-week top, around the 0.8875-0.8880 region in the last hour.

The shared currency's relative outperformance comes amid rising bets for additional jumbo interest rate hikes by the European Central Bank (ECB) in the coming months. The expectations were lifted by signs of rebounding inflation in France, Spain and Germany - the Eurozone's three biggest economies. This, in turn, lifts the yield on Germany’s rate-sensitive two-year bond to its highest level since the 2008 financial crisis.

Apart from this, a sharp US Dollar pullback from a multi-week high further boosts the Euro and provides a goodish lift to the EUR/GBP cross. A weaker Greenback, meanwhile, also benefits the British Pound, which remains supported by the latest optimism over the UK-EU agreement on the new Northern Ireland protocol. Adding to this, speculations for additional rate hikes by the Bank of England (BoE) could cap gains for the cross.

From a technical perspective, the EUR/GBP bulls have been showing resilience near the 100-day SMA and the subsequent move-up supports prospects for additional gains. Hence, some follow-through strength, back towards reclaiming the 0.8900 mark, now looks likely a distinct possibility. The momentum could get extended towards the 0.8950-0.8955 intermediate hurdle en route to the YTD peak, around the 0.8980 zone touched in February.

Technical levels to watch

EUR/GBP

Overview
Today last price	0.8874
Today Daily Change	0.0080
Today Daily Change %	0.91
Today daily open	0.8794

Trends
Daily SMA20	0.8861
Daily SMA50	0.8832
Daily SMA100	0.8752
Daily SMA200	0.8664

Levels
Previous Daily High	0.8812
Previous Daily Low	0.8755
Previous Weekly High	0.8892
Previous Weekly Low	0.8784
Previous Monthly High	0.8979
Previous Monthly Low	0.8755
Daily Fibonacci 38.2%	0.8777
Daily Fibonacci 61.8%	0.879
Daily Pivot Point S1	0.8762
Daily Pivot Point S2	0.873
Daily Pivot Point S3	0.8705
Daily Pivot Point R1	0.8818
Daily Pivot Point R2	0.8843
Daily Pivot Point R3	0.8875

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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