EUR/GBP rebounds to near 0.8590 as hawkish ECB bets remain steady, UK Employment eyed


  • EUR/GBP has recovered from 0.8580 as ECB to remain hawkish despite deepening fears of recession.
  • Eurozone final Q1 GDP contracted by 0.1% while the street was anticipating a stagnant performance.
  • Higher interest rates by the BoE are keeping pressure on the BoE.

The EUR/GBP pair has shown a recovery move after finding buying interest near 0.8580 in the early European session. The cross has rebounded despite the Eurostat reported a contraction in final Q1 Gross Domestic Product (GDP) numbers.

On Thursday, the final Q1 GDP displayed a contraction by 0.1% while the street was expecting a stagnant performance from a downwardly revised figure of 0.1% expansion. Annual GDP expanded by 1.0% but at a slower pace than the prediction of 1.2% and the former release of 1.3%. The odds for Eurozone falling into a recession are extremely solid as the European Central Bank (ECB) is not going to pause its policy-tightening spell to tame sticky inflation.

Investors should note that the German economy has already reported a recession after registering a contraction in GDP figures consecutively for two quarters.

According to a clear majority of economists polled by Reuters, ECB President Christine Lagarde will hike its key interest rates by 25 basis points (bps) on June 15 and again in July before pausing for the rest of the year. The move of hiking rates further by a total of 50 bps would push key rates to 4.25%.

On the Pound Sterling front, investors are shifting their focus toward the United Kingdom Employment data, which will release next week. Higher interest rates by the Bank of England (BoE) and expectations of more rate hike announcements by BoE Governor Andrew Bailey would keep pressure on the overall hiring process.

Economists at ING said second or third-tier United Kingdom data has been quite mixed recently, but the main event on the data front will be next Tuesday's release of jobs and wages data. We see that as a negative event risk for the Sterling, where wage growth could continue to slow and take some of the steam out of the 100 bps+ Bank of England tightening expectations still priced in by money markets.

EUR/GBP

Overview
Today last price 0.8589
Today Daily Change 0.0005
Today Daily Change % 0.06
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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