EUR/GBP breaks above 0.8650 and reaches its highest level in a year

• Technical factors and a weaker pound propell EUR/GBP to its highest level since May 2021.
• The cross breaks out of the multi-day range and breaks out.
• UK data disappoints expectations, special attention to the BoE on Thursday.

The EUR/GBP It breaks out of a multi-day range and jumps to 0.8681, reaching the highest level since May 2021. The cross is up almost a hundred pips on Tuesday, rising for the third day in a row. The euro is also higher against the Swiss franc on Tuesday. EUR/CHF broke above 1.0420 hitting the highest level since June 9th.

The breakout of the critical resistance zone at 0.8600 and also above 0.8650, propelled the Euro higher. The next level to watch is 0.8700. EUR/GBP’s bullish tone will hold as long as it is above 0.8600.

UK economic data came in below expectations with the unemployment rate unexpectedly rising to 3.8%. The figures helped weaken the pound ahead of Thursday’s Bank of England meeting.

The central bank is expected to raise the base interest rate by 25 basis points to 1.25%. “There will be no updated macro forecast until the next meeting on August 4. The WIRP suggests a 35% chance of a 50 basis point move, up from over 50% earlier this week. However, the odds of moves of 50 basic points in the meetings of August 4 and November 3 have increased”, explain the analysts of Brown Brothers Harriman. The pound remains under pressure despite expectations of a tightening.

Technical levels