- EUR / GBP is hovering in a range below the 200 median on Thursday.
- Brexit nervousness, Bank of England shift in expectation, disappointing UK macro data weigh on GBP.
EUR / GBP traded between minor gains and losses on Thursday, on neutral ground, around the 0.8560 region. The cross struggles to capitalize on the gains recorded in the last two previous sessions and remains trapped below the very important 200-day SMA, although the weakness appears limited.
Concerns that the UK government will activate Article 16 of the Northern Ireland Protocol, along with a more dovish Bank of England last week, could act as a headwind for the British pound. The currency was affected by the lower than expected reading of the UK GDP, showing that the economy expanded by 1.3% during the July-September period. This marked a sharp slowdown from the 5.5% growth recorded in the prior quarter and was worse than the 1.5% market consensus.
On the other hand, the shared currency found some support after the European Central Bank (ECB) – in its latest economic bulletin – indicated that inflation will last longer than initially expected. Adding that the European Commission said that it expects inflation in the Eurozone to be 2.4% in 2021, 2.2% in 2022 and 1.4% in 2023, which once again puts the ECB’s interest rate hike expectations on the table.
The fundamental backdrop favors bullish traders, although a sustained break through the 200-day mean barrier, around the 0.8575-80 region, is needed to confirm the positive bias.
Technical levels
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