- EUR/GBP gains some positive traction on Friday, though lacks follow-through buying.
- Bets for another supersized 75 bps ECB rate hike underpin the Euro and offers support.
- The GBP consolidates its recent gains and does little to provide any meaningful impetus.
The EUR/GBP cross attracts some buying on Friday and reverses a major part of the overnight slide to a three-month low, levels just below mid-0.8500s. The cross sticks to its modest gains through the early European session and is currently placed near the daily top, just above the 0.8600 mark.
The shared currency draws some support from European Central Bank President Christine Lagarde's remarks earlier this Friday, which, in turn, acts as a tailwind for the EUR/GBP cross. Lagarde reiterated the need to ensure that inflation returns to its goal. This comes on the back of her comments earlier this week that the region’s inflation has not peaked and favours another supersized 75 bps rate hike in December.
That said, softer-than-expected Eurozone consumer inflation figures released on Wednesday might have cooled expectations for more aggressive policy tightening by the Fed and might cap the Euro. In fact, the flash estimate published by Eurostat showed the annualized Eurozone Harmonised Index of Consumer Prices (HICP) recorded its first drop since mid-2021 and decelerated to a 10.0% YoY rate in November.
This, in turn, could act as a headwind for the Euro. The high beta British Pound, on the other hand, remains well supported by a generally positive risk tone and the prevalent US Dollar selling bias. The combination of aforementioned factors might keep a lid on any meaningful recovery move for the EUR/GBP cross, at least for the time being, warranting some caution for aggressive bullish traders.
Even from a technical perspective, the overnight breakdown below the 0.8575-0.8570 horizontal support favours bearish traders. That said, the emergence of some buying in the vicinity of the very important 200-day SMA makes it prudent to wait for strong follow-through selling before positioning for a further depreciating move.
Technical levels to watch
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
AUD/USD: Extra gains in the pipeline above 0.6520
AUD/USD partially reversed Tuesday’s strong pullback and regained the 0.6500 barrier and beyond in response to the sharp post-FOMC pullback in the Greenback on Wednesday.
EUR/USD meets support around 1.0650
EUR/USD managed to surpass the key 1.0700 barrier in response to the intense retracement in the US Dollar in the wake of the Fed’s interest rate decision and Chair Powell’s press conference.
Gold surpasses $2,300 as Dollar tumbles
The precious metal maintains its constructive stance and trespasses the $2,300 region on Wednesday after the Federal Reserve left its FFTR intact, matching market expectations.
Bitcoin price reclaims $59K as Fed leaves rates unchanged
The market was at the edge of its seat on Wednesday to see whether the US Federal Reserve (Fed) would cut interest rates during the Federal Open Market Committee (FOMC) meeting.
The market welcomes the Fed's statement
The market has welcomed the Fed statement, and the S&P 500 is higher in its aftermath, the dollar is lower and Treasury yields are falling. There is still only one cut priced in by the Fed.