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EUR/GBP crosses the 0.8700 barrier and rises to the highest level since February 2021

  • EUR/GBP gains some traction for the fourth day in a row and climbs to new highs in over a year.
  • The prospects of a less aggressive Bank of England and the Scottish referendum continued to weigh on the pound sterling.
  • Market participants expect the ECB’s ad hoc meeting to provide some significant momentum.

The crossing EUR/GBP extends the previous day’s bullish momentum above the 0.8600 level and gains some traction for the fourth day in a row. The strong movement has taken the crossing to a new one-year high, around the region of 0.8720 during the European session on Wednesday.

Macroeconomic data from the UK, especially the monthly GDP report released on Monday, which showed a surprising contraction in April, suggest that the Bank of England could take a more cautious approach to raising interest rates. This, along with the impasse between the UK and the EU over the Northern Ireland protocol of the Brexit agreement and the prospects of a new referendum on Scottish independence, weighed on the pound sterling.

On the other hand, the common currency was supported by a more aggressive turn by the European Central Bank (ECB), which indicated that in July it would carry out its first rate hike since 2011. The ECB also left the door open for a potentially bigger move in Septemberwhich was seen as another factor that continued to act as a tailwind for the EUR/GBP cross and continued to support the strong move higher.

That said, the recent expansion of the spread between yields in Germany and struggling southern countriesparticularly Italy, which soared to its highest in more than two years, capped profits. Therefore, the market’s attention will continue to focus on the meeting of the ad hoc Governing Council of the ECB to discuss the recent sale of public debt marketsscheduled for 09:00 GMT on Wednesday.

Investors will also be closely watching ECB President Christine Lagarde’s speech, scheduled for later in the American session. Next, the market’s attention will shift to Thursday’s Bank of England monetary policy meeting, which will play a key role in influencing short-term sentiment around the British pound. This, in turn, would provide a further directional boost to the EUR/GBP cross.

EUR/GBP technical levels

EUR/GBP

Panorama
Last Price Today 0.8711
Today’s Daily Change 0.0029
Today’s Daily Change % 0.33
Today’s Daily Opening 0.8682
Trends
20 Daily SMA 0.853
50 Daily SMA 0.8456
100 Daily SMA 0.8413
200 Daily SMA 0.8443
levels
Previous Daily High 0.8716
Previous Daily Minimum 0.8552
Previous Maximum Weekly 0.8592
Previous Weekly Minimum 0.8486
Monthly Prior Maximum 0.8619
Previous Monthly Minimum 0.8367
Daily Fibonacci 38.2% 0.8653
Daily Fibonacci 61.8% 0.8615
Daily Pivot Point S1 0.8584
Daily Pivot Point S2 0.8486
Daily Pivot Point S3 0.842
Daily Pivot Point R1 0.8748
Daily Pivot Point R2 0.8814
Daily Pivot Point R3 0.8912

Source: Fx Street

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