- EUR/GBP advances on Tuesday to retest the 0.8600 level.
- UK wages disappoint, Eurozone sentiment improves sharply.
- The pair remains very bearish, with an uptrend.
EUR/GBP returned to the 0.8600 area on Tuesday, boosted by falling UK wages and a better-than-expected result in the ZEW Eurozone Economic Sentiment Survey.
UK wages, including and excluding bonuses, missed market estimates on Tuesday, coming in below expectations and weakening the British Pound (GBP) against the Euro (EUR).
In the UK, average non-bonus earnings for the quarter to October showed wages rose 7.3% compared to the same period last year, missing market forecasts of 7.4% and returning below from 7.8% in the previous period (revised slightly upward from 7.7%, widening the gap further).
In the UK, average earnings including bonuses also fell to 7.2%, versus 7.7% expected, reversing the previous period’s trend of 8%, which was also revised up from 7.9%.
The number of UK job seekers exceeded market expectations in November but was still worse than the previous month, with 16,000 extra benefit claimants compared to the expected 20,300; In October, 8,900 new applicants were registered, a figure that was revised downwards from 17,800 in October.
The ZEW survey of Eurozone economic sentiment exceeded expectations and came in at a firm 23.0, well above the forecast of 12.0 points and the previous month’s 13.8.
Markets’ attention will focus on the ECB and the Bank of England
On Wednesday there will be a slight pause with industrial production in the United Kingdom and the Eurozone, before Thursday’s double meeting with the Bank of England (BoE) and the European Central Bank (ECB).
Both central banks are expected to maintain interest rates, and investors will pay close attention to the monetary policy statements from both banks to try to determine the degree of moderation from the Bank of England and the ECB heading into the new year.
EUR/GBP Technical Outlook
The initial drop in the British Pound (GBP) on Tuesday causes the Euro (EUR) to catch a bid and send EUR/GBP back to the 0.8600 level. Price action is tightening once again and the pair is struggling to hold support at the key level, but intraday bids are grabbing technical support from the 200-hour SMA near 0.8580.
The price action is narrowing once again and the pair is struggling to hold the key level, but intraday bids are getting technical support from the 200 hourly simple moving average (SMA) near 0.8580.
Despite Tuesday’s bullish momentum, EUR/GBP remains sharply bearish, weighed down near multi-month lows and price action is trading well below the 200-day SMA, moving towards the 0.8660 level.
The 0.8560 level is consolidating into a firm price bottom, keeping bearish momentum limited for now, while bullish plays will see a hard barrier near 0.8620.
EUR/GBP Hourly Chart
EUR/GBP Daily Chart
EUR/GBP technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
