- EUR/GBP recently hit fresh 23-month lows below the 0.8310 level on Thursday.
- The publication of the latest ECB Minutes did not affect the sentiment of the foreign exchange market.
- Markets are focused on another potential BoE rate hike next month.
The EUR/GBP it recently rose to fresh 23-month lows below the 0.8310 level on Thursday and is now down 0.3% on the session and is eyeing a test of 0.8300. The publication of the latest ECB Minutes did not affect the sentiment of the foreign exchange market, as it did not contain any surprises or new revelations. EUR/GBP’s latest push lower marks a nearly 70-pip reversal from Wednesday’s highs near 0.8380, with traders seemingly taking the opportunity provided by the rally to add short positions as the pair retested its trading lows. November 2021 (at 0.8380).
Traders might reason that with the recent data series strongly supporting expectations that the BoE will raise interest rates again in February, the policy divergence between the BoE and the ECB will continue to be a key driver of the EUR’s decline. /GBP. Recall that Tuesday’s labor market data saw the UK jobless rate fall back to pre-pandemic levels and Wednesday’s consumer price inflation data hit its highest level in 30 years.
Some analysts are calling for the pair to retest late 2019/early 2020 lows at 0.8270/80 soon, despite uncertainty over whether Boris Johnson will remain as UK Prime Minister. Analysts at Berenberg said a change in Prime Minister could end up being positive for UK markets, as the Conservative Party would likely choose a replacement based on who is most likely to beat Labor leader Keir Starmer in the next election. generals.
The bank argues that a new Prime Minister would likely pursue “Johnson-like policies in a much more calm and deliberate manner”. ING says that “unsurprisingly political risk hasn’t hurt sterling”, adding that “the focus remains on whether the BoE rises 25bps on Feb 3.” The bank continues to favor EUR/GBP retesting the aforementioned 2019/20 lows below 0.8300 soon.
Additional technical levels
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