- Euro gains momentum following Spain’s inflation data, ahead of ECB.
- EZ bond yields rise, German 10-year climbs to 2.32%, the highest since January 6.
- EUR/GBP challenges 0.8800 after finding support at 0.8755.
The EUR/GBP is rising on Monday after falling for three consecutive days. The euro is rebounding from weekly lows near 0.8755 and is testing the 0.8800 area, supported by the latest round of Eurozone economic data and ahead of monetary policy decisions.
Busy week
Data released on Monday showed Inflation in Spain surprised to the upside. The Harmonised Consumer Price Index in Spain rose to 5.8% in January from 5.5% in December and above the market consensus of 4.8%. It was the first acceleration since July supporting expectations of a hawkish European Central Bank (ECB). More Euro Zone inflation data is due on Tuesday.
In Germany, the economy contracted 0.4% during the fourth quarter, against expectations of a flat reading, according to preliminary data. On the positive side, Consumer Confidence in the Eurozone improved to -20.9 in January, while the Economic Sentiment also ticked higher to 99.9.
After the numbers, Eurozone government bond yields rose, supporting the Euro across the board. The German 10-year yield rose to 2.32%, the highest since January 6.
On Thursday, the ECB will have its monetary policy meeting. A 50 basis points rate hike is priced in. The statement and clues about the future path will be the critical factors of the meeting.
In the UK, UK Prime minister Rishi Sunak said he will not raise taxes in order to fund pay raises for Health Service workers. During the weekend, Sunak fired Conservative Party chairman Nadhim Zahawi over a tax row.
The Bank of England is expected to raise its key interest rate by 50 basis points on Thursday, although many analysts expected a smaller increase. There is a division at the Monetary Policy Committee that will likely continue this week.
The EUR/GBP cross will likely have a volatile week, particularly on Thursday, the central bank’s day. Ahead of those critical events, the cross is moving sideways, testing the 20-day Simple Moving Average and the 0.8800 area. On the upside, the immediate strong resistance is seen around 0.8860. On the flip side, a close below 0.8730 should open the doors to more losses.
Technical levels
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 extends gains above 1.0700, focus on key US data
EUR/USD meets fresh demand and rises toward 1.0750 in the European session on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
GBP/USD extends recovery above 1.2500, awaits US GDP data
GBP/USD is catching a fresh bid wave, rising above 1.2500 in European trading on Thursday. The US Dollar resumes its corrective downside, as traders resort to repositioning ahead of the high-impact US advance GDP data for the first quarter.
Gold price edges higher amid weaker USD and softer risk tone, focus remains on US GDP
Gold price (XAU/USD) attracts some dip-buying in the vicinity of the $2,300 mark on Thursday and for now, seems to have snapped a three-day losing streak, though the upside potential seems limited.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price.
US Q1 GDP Preview: Economic growth set to remain firm in, albeit easing from Q4
The United States Gross Domestic Product (GDP) is seen expanding at an annualized rate of 2.5% in Q1. The current resilience of the US economy bolsters the case for a soft landing.