EUR/GBP turns sideways around 0.8800, looks delicate amid hawkish BoE bets

EUR/GBP looks vulnerable around 0.8800 as hawkish BoE bets soar after a recovery in UK preliminary PMI data.
UK’s Hunt is facing calls from within his Conservative Party to cut taxes and raise pay for public service workers.
ECB Lagarde is set to continue its policy tightening spell of 50 bps to March.

Sagar Dua FXStreet

The EUR/GBP pair is struggling to find any direction in the Tokyo session amid the absence of a potential trigger. The cross is juggling around 0.8800 and is expected to display more weakness as an economic recovery in the United Kingdom and a shortage of labor is demanding the continuation of policy tightening by the Bank of England (BoE).

Investors were in a dilemma whether the Bank of England (BoE) should pause policy contraction as the economic outlook was expected extremely bleak or continue pushing rates higher to tame stubborn inflation. Shortage of labor and escalating food inflation is continuously maintaining havoc that the inflation could be underpinned anytime to new highs.

No doubt, the UK Consumer Price Index (CPI) has eased in the past few months, however, the headline CPI figure is still in double-digit and sufficient to trouble households.

Meanwhile, a recovery in the economic activities shown by the preliminary S&P Global PMI (Feb) data, released this week, indicates that labor demand could be fueled further and BoE Governor Andrew Bailey should consider continuation of policy tightening. A figure below 50.0 for the preliminary Manufacturing activities indicates contraction, however, the pace of decline in activities has squeezed significantly.

BoE panel sees the interest rate peak around 4.5% and the continuation of the rate hike in the March monetary policy meeting looks warranted.

Meanwhile, UK Finance Minister (FM) Jeremy Hunt is facing calls from within his Conservative Party to cut taxes in his March 15 budget and from trade unions to raise pay for public service workers, as reported by Reuters, which could propel inflationary pressures further.

On the Eurozone front, clarity on the extent of the rate hike by the European Central Bank (ECB) President Christine Lagarde has eased some uncertainty. ECB Lagarde has announced a continuation of 50 bps rate hike spree for March to keep the downside momentum in Eurozone inflation intact.

EUR/GBP

Overview
Today last price	0.8806
Today Daily Change	0.0002
Today Daily Change %	0.02
Today daily open	0.8804

Trends
Daily SMA20	0.8856
Daily SMA50	0.8825
Daily SMA100	0.8751
Daily SMA200	0.8657

Levels
Previous Daily High	0.8822
Previous Daily Low	0.8784
Previous Weekly High	0.8929
Previous Weekly Low	0.8804
Previous Monthly High	0.8897
Previous Monthly Low	0.8722
Daily Fibonacci 38.2%	0.8808
Daily Fibonacci 61.8%	0.8799
Daily Pivot Point S1	0.8784
Daily Pivot Point S2	0.8765
Daily Pivot Point S3	0.8746
Daily Pivot Point R1	0.8823
Daily Pivot Point R2	0.8842
Daily Pivot Point R3	0.8862

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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