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EUR / GBP breaks below 0.8500 to 8-week low

  • The pound extends weekly gains against the euro on Thursday.
  • EUR / GBP next resistance at 0.8470, then focus turns to yearly lows around 0.8450.

The EUR/GBP falls for the sixth day in a row. On Thursday, it broke below 0.8500 and bottomed at 0.8480, the lowest level since mid-August. The euro remains under pressure against the pound.

The euro is recovering against the Swiss franc on Thursday, but cannot stop the slide against the British pound. After last week’s concerns regarding the fuel crisis, the improvement in the UK’s economic outlook is helping the pound.

Furthermore, the latest economic reports from the euro zone were not positive, with negative figures for industrial production in Germany. The reports suggested that the European Central Bank is studying a new QE program to limit the potential impact of the end of the PEPP next year. The Minutes of the last ECB meeting showed no surprises.

Technical factors are contributing to the EUR / GBP slide. On Wednesday, it failed to recover 0.8550 and is now below 0.8500. A consolidation at current levels would keep the bearish tone intact, despite the oversold reading in short-term technical indicators.

Key critical support is seen at the August low at 0.8446. A weekly close above 0.8600 would be a positive development for the euro, suggesting that a bottom has been established and could open the doors to further gains.

Technical levels

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