- The EUR/GBP cross attracts some buying on Monday amid sustained selling around the British pound.
- The gloomy economic outlook from the Bank of England turns out to be a key factor weighing on the British pound.
- A combination of factors weighs on the euro and limits significant gains in the pair.
The crossing EUR/GBP maintains its modest intraday gains during the first half of the European session on Monday and moves near the upper end of its daily range, just above 0.8550.
Following the previous session’s pullback from the yearly high, the EUR/GBP cross attracted fresh buying near the 0.8530 area on Monday, although the rally lacked bullish conviction. The Bank of England’s warning last week, stating that the economy was at risk of slipping into recession, suggesting that the current cycle of rate hikes may be about to come to a halt. This, in turn, was seen as a key factor behind sterling’s underperformance and acted as a tailwind for the cross.
Nevertheless, A combination of factors prevented investors from opening aggressively bullish positions on the common currency and capped any significant gains for the EUR/GBP cross., at least for now. Investors continue to fear that the European economy is the most affected by the Ukraine crisis. Apart from this, the incessant buying interest in the US dollar and the disappointing Eurozone Sentix investor confidence index turned out to be key factors weighing on the euro.
From the technical point of view, strong post-BoE bullish move above the important 200-day SMA and a descending trend line extending from April 2021 support prospects for further gains. Therefore, some continuation strength, towards the recovery of the 0.8600 level for the first time since October 2021, remains a distinct possibility. In the absence of market-relevant economic releases, investors will be guided by a scheduled speech by Bank of England Monetary Policy Committee member Michael Saunders.
EUR/GBP technical levels
Source: Fx Street
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