- EUR/GBP maintains bullish bias but fails to hold above 0.8700.
- UK growth below expectations in July.
EUR/GBP rallied as high as 0.8721, just a pip past the 2022 high and hitting intraday levels not seen since February 2021. But then reversed and erased gains by falling to the 0.8670 area.
The cross still fails to assert itself above 0.8700, signaling trouble extending the upside. In case of being able to do it, it would be expected more rises in the medium term. A return below 0.8630 would take momentum from the euro favoring a downward correction.
Between central banks and growth
In the United Kingdom, television focuses on the final journey of Queen Elizabeth II and the first steps of King Charles III. The meeting of Bank of England was postponed a week. A significant rise in the interest rate is still expected, which could be 75 basic points, to face the rise in inflation.
On Monday it was known that the British economy grew again in July by 0.2%. The data was below expectations for 0.5% growth.
In Europe a key issue continues to be energy in preparation for winter. Rate hikes and the possibility of gas shortages affect consumer expectations and confidence. On Friday, the energy ministers of the European Union met due to the crisis.
The advance of the EUR/GBP of those weeks is behind a European Central Bank more aggressive. The monetary authority raised rates by 75 basis points last week and officials point to more tightening ahead. This remains a supportive factor for the euro. If the market sees ahead, a more aggressive ECB than the BoE, this may be a determining factor for further gains in the EUR/GBP.
Technical levels
Source: Fx Street
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