• EUR/GBP cross extends its recent corrective slide from a two-year high for the fourth straight day.
  • The BoE’s intervention, an upward revision of the UK GDP underpins sterling and exerts pressure.
  • Weaker USD, hotter-than-expected Eurozone CPI offer support to the euro and helps limit losses.

The EUR/GBP cross extends this week's sharp retracement slide from a two-year peak and remains under some selling pressure for the fourth straight day on Friday. The steady downfall remains uninterrupted through the first half of the European session and drags spot prices to mid-0.8700s or a fresh weekly low.

The British pound's relative outperformance comes on the back of the Bank of England's intervention in the UK debt market for the second day on Thursday. This, along with an upward revision of the UK Q2 GDP print, further underpins sterling on Friday and continues exerting downward pressure on the EUR/GBP cross. In fact, the UK Office for National Statistics reported this Friday that the economy expanded by 0.2% during the second quarter against a modest 0.1% contraction estimate, easing recession fears.

That said, a combination of factors assists the EUR/GBP cross to find some support at lower levels. Investors remain worried that the new UK government's historic tax cuts could stretch Britain's finances to their limits. This, in turn, threatens to derail the BoE's efforts to contain inflation and create additional economic headwinds. The shared currency, on the other hand, draws support from the weaker US dollar and hotter-than-expected Eurozone CPI, which, in turn, limits the downside for the cross.

According to the official data released by Eurostat on Friday, inflation in the euro area, as measured by the Harmonised Index of Consumer Prices (HICP), climbed to 10% on a yearly basis in September. This marks a notable rise from 9.1% in August and was also higher than market expectations for a reading of 9.7%. This reaffirms markets bets for another jumbo interest rate hike by the European Central Bank and could lend some support to the EUR/GBP cross, warranting caution for aggressive bearish traders.

Technical levels to watch

EUR/GBP

Overview
Today last price 0.8782
Today Daily Change -0.0047
Today Daily Change % -0.53
Today daily open 0.8829
 
Trends
Daily SMA20 0.875
Daily SMA50 0.8572
Daily SMA100 0.8554
Daily SMA200 0.8466
 
Levels
Previous Daily High 0.898
Previous Daily Low 0.8819
Previous Weekly High 0.8937
Previous Weekly Low 0.8692
Previous Monthly High 0.8653
Previous Monthly Low 0.834
Daily Fibonacci 38.2% 0.888
Daily Fibonacci 61.8% 0.8918
Daily Pivot Point S1 0.8772
Daily Pivot Point S2 0.8715
Daily Pivot Point S3 0.8612
Daily Pivot Point R1 0.8933
Daily Pivot Point R2 0.9036
Daily Pivot Point R3 0.9094

 

 

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