EUR/GBP surrenders intraday gains to three-day tops, back below 0.8500 mark


  • EUR/GBP witnessed heavy selling during the early part of the European session on Tuesday.
  • Hawkish BoE signals helped revive the GBP demand and prompted selling around the cross.
  • Disappointing ZEW Survey results weighed on the euro and contributed to the intraday slide.

The EUR/GBP cross faded an early European session bullish spike to three-day tops and dropped to fresh daily lows, back below the key 0.8500 psychological mark in the last hour.

The cross gained some positive traction during the first half of the trading action on Tuesday, albeit struggled to capitalize on the move and witnessed an intraday turnaround from the 0.8520 area. A sudden pickup in demand for the British pound turned out to be a key factor that prompted aggressive selling around the EUR/GBP cross.

Over the weekend, the Bank of England (BoE) officials, including Governor Andrew Bailey, signalled an imminent interest rate later this year. The money market seems to have fully priced in a 25bps BoE rate hike in December. This was evident from a spike in the UK 10-year gilt yield, which rose to the highest level since May 2019, at 1.222% on Monday.

On the other hand, the European Central Bank (ECB) chief economist Philip Lane said that the medium-term inflation dynamic is too slow and that the trigger for monetary policy action is not there. This widened the UK-German 10-year bond yield differential to the highest since mid-2016, favouring the GBP bulls and acting as a headwind for the EUR/GBP cross.

Apart from this, worsening economic sentiment in the Eurozone's largest economy – Germany – undermined the shared currency and contributed to the EUR/GBP pair's sudden fall over the past hour or so. In fact, the German ZEW Economic Sentiment Index fell to 22.3 from 26.5 previous and missed consensus estimates pointing to a reading of 24.0.

That said, a modest US dollar weakness extended some support to the euro and helped limit any deeper losses for the EUR/GBP cross, at least for the time being. Nevertheless, the fundamental backdrop seems tilted in favour of bearish traders and supports prospects for an extension of the recent sharp pullback from the very important 200-day SMA.

Technical levels to watch

EUR/GBP

Overview
Today last price 0.8498
Today Daily Change 0.0001
Today Daily Change % 0.01
Today daily open 0.8497
 
Trends
Daily SMA20 0.855
Daily SMA50 0.8545
Daily SMA100 0.8562
Daily SMA200 0.8631
 
Levels
Previous Daily High 0.8502
Previous Daily Low 0.8472
Previous Weekly High 0.8574
Previous Weekly Low 0.8475
Previous Monthly High 0.8658
Previous Monthly Low 0.8501
Daily Fibonacci 38.2% 0.8491
Daily Fibonacci 61.8% 0.8484
Daily Pivot Point S1 0.8479
Daily Pivot Point S2 0.8461
Daily Pivot Point S3 0.8449
Daily Pivot Point R1 0.8509
Daily Pivot Point R2 0.852
Daily Pivot Point R3 0.8539

 

 

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD climbs above 1.1250 as investors eye coronavirus headlines

EUR/USD preserved its recovery momentum early Friday and rose above 1.1250 during the European trading hours. Markets are doubting the Fed's policy tightening prospects as the new coronavirus variant revives concerns over the economic recovery losing steam.

EUR/USD News

GBP/USD rebounds toward mid-1.3300s on broad dollar weakness

GBP/USD reversed its direction after dipping below 1.3300 earlier in the day and started to push higher toward 1.3350. The greenback is facing heavy selling pressure amid the sharp decline witnessed in the 10-year US Treasury bond yield.

GBP/USD News

Gold clings to strong gains above $1,800 as US T-bond yields plunge Premium

Gold staged a decisive rebound on Friday and reclaimed $1,800. The intense flight to safety is causing US Treasury bond yields to fall sharply and fueling XAU/USD's rally. Investors await news on vaccines' effectiveness against the new COVID variant.

Gold News

Cardano could tank to $1 if ADA fails to defend crucial support

Cardano price is currently hovering below a freshly shattered 6-hour demand zone, ranging from $1.68 to $1.79. This resulting crash could extend to the immediate and critical foothold at $1.40. 

Read more

Black Friday 2021 Discounts!

Do you want to take your trading skills to the next level? Now you have a chance of leaping forward at attractive introductory rates. For Black Friday, FXStreet is offering discounts of up to 50% on its upgraded Premium plans. 

Subscribe now!

Forex MAJORS

Cryptocurrencies

Signatures