|

EUR/GBP sits near three-week high, around 0.8665 area as traders keenly await UK GDP

  • EUR/GBP gains some positive traction for the third straight day and climbs to a three-week top.
  • A bleak outlook for the UK economy continues to undermine the GBP and remains supportive.
  • Speculations that the ECB will end its rate-hiking cycle cap gains ahead of the UK macro data.

The EUR/GBP cross touches a three-week high, around the 0.8670 area, during the Asian session on Friday and looks to build on its strong weekly gains registered over the past two days.

Despite the recent surge in European gas prices, the shared currency continues to outperform its British counterpart in the wake of a further rise in German bond yields. Apart from this, a bleak outlook for the UK economy continues to undermine the Sterling Pound and turns out to be another factor acting as a tailwind for the EUR/GBP cross. It is worth recalling that the National Institute of Economic and Social Research (NIESR) said earlier this week that it would take until the third quarter of 2024 for UK output to return to its pre-pandemic peak.

In its quarterly update, the NIESR added that there was a 60% risk of the government going to the polls during a recession. This comes on the back of the Bank of England's (BoE) less hawkish forward guidance, signalling that the tightening cycle may be nearing an end, and pushes the EUR/GBP cross higher for the third straight day. Traders, however, seem reluctant to place aggressive bullish bets and prefer to wait on the sidelines ahead of the key UK macro data, including the preliminary Q2 GDP report, due for release this Friday.

Any signs of unexpected strength or weakness in the economy will influence expectations about the BoE's future rate-hike path and impact the British Pound, which has been struggling to gain any meaningful traction, so far, in August. In the meantime,  speculations that the European Central Bank (ECB) will halt its streak of nine consecutive rate hikes in September might cap the upside for the EUR/GBP cross. The ECB economic bulletin published last Friday noted that the underlying inflation in the region likely peaked during the first half of 2023.

Apart from this, the worsening economic conditions and mounting recession fears might further contribute to keeping a lid on any meaningful appreciating move for the Euro. Nevertheless, the EUR/GBP cross, at current levels, remains on track to register gains for the second successive week as market participants now look to the UK economic docket to grab short-term trading opportunities.

Technical levels to watch

EUR/GBP

Overview
Today last price0.8665
Today Daily Change0.0002
Today Daily Change %0.02
Today daily open0.8663
 
Trends
Daily SMA200.8609
Daily SMA500.8587
Daily SMA1000.8671
Daily SMA2000.8725
 
Levels
Previous Daily High0.8666
Previous Daily Low0.8625
Previous Weekly High0.8656
Previous Weekly Low0.855
Previous Monthly High0.8701
Previous Monthly Low0.8504
Daily Fibonacci 38.2%0.865
Daily Fibonacci 61.8%0.864
Daily Pivot Point S10.8637
Daily Pivot Point S20.861
Daily Pivot Point S30.8596
Daily Pivot Point R10.8678
Daily Pivot Point R20.8692
Daily Pivot Point R30.8719

Author

Haresh Menghani

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

More from Haresh Menghani
Share:

Editor's Picks

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading 

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.