EUR/GBP recovers the 20-day SMA amid EUR strength

EUR/GBP recovered the 20-day SMA rising near 0.8630, seeing nearly 0.40% gains.
EUR is one of Wednesday’s top performers amongst its rivals.
No relevant data will be released for either economy. Tightening expectations of BoE and ECB to dictate the pace.

Patricio Martín FXStreet

At the middle of the week, the EUR/GBP recovered ground and jumped above the 20-day Simple Moving Average (SMA) of 0.8600. The EUR trades with gains against the USD, CHF, JPY, and AUD on higher German yields while the Pound trades soft.

On a quiet week, tightening expectations dictate the pace of the EUR/GBP cross, and rising German yields are pushing the pair higher. The 10-year bond yield rose to 2.47%, while the 2-year yield stands at 3.09% and the 5-year yielding 2.53%, respectively, making the EUR gain interest against its rivals. The focus now shifts to next week’s Q2 Gross Domestic Product (GDP) and inflation data from July from the European Union, which will help investors to model the next data-dependant European Central Bank (ECB) decision.

On the Pound’s side, GDP data on Friday will be key. The Bank of England reported in it last monetary policy statement that it no longer expects a recession, so the economic outlook in the UK will have an impact on the bets of market participants on the next BoE’s decision. As for now, they still bet, according to the World Interest Rate Possibilities (WIRP), a terminal rate of 5.75%, meaning an additional 50 basis point tightening for the rest of this cycle.

EUR/GBP Levels to watch

The daily chart suggests that the technical outlook is neutral to bullish for the short term as the bulls gain momentum, but buyers still have some work to do. The Relative Strength Index (RSI) has a positive slope in the bullish territory just above its midline, while the Moving Average Convergence (MACD) histogram displays increasing green bars. On the other hand, the pair is above the 20-day Simple Moving Average (SMA) but below the 100 and 200-day SMAs, indicating that there is still some light for the bulls but that the bears have the upperhand on the bigger picture.

Support levels: 0.8600 (20-day SMA), 0.8570, 0.8530.

Resistance levels: 0.8670 (100-day SMA), 0.8680, 0.8700

EUR/GBP Daily chart

EUR/GBP

Overview
Today last price	0.8626
Today Daily Change	0.0032
Today Daily Change %	0.37
Today daily open	0.8594

Trends
Daily SMA20	0.86
Daily SMA50	0.8585
Daily SMA100	0.8675
Daily SMA200	0.8725

Levels
Previous Daily High	0.8626
Previous Daily Low	0.8594
Previous Weekly High	0.8656
Previous Weekly Low	0.855
Previous Monthly High	0.8701
Previous Monthly Low	0.8504
Daily Fibonacci 38.2%	0.8606
Daily Fibonacci 61.8%	0.8613
Daily Pivot Point S1	0.8584
Daily Pivot Point S2	0.8573
Daily Pivot Point S3	0.8552
Daily Pivot Point R1	0.8615
Daily Pivot Point R2	0.8636
Daily Pivot Point R3	0.8647

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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