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EUR/GBP range bound around 0.8650 ahead of Bailey and German CPI

  • EUR/GBP lacks firm intraday direction and remains stuck in a tight range.
  • Rumors of more aggressive ECB rate hikes benefit the Euro and offer some support for the pair.
  • Preliminary German CPI and the Bank of England Governor’s speech are the factors driving the pair.

The crossing EUR/GBP is struggling to take advantage of a two-day rally move from the 0.8575-0.8570 support zone, and is trading in a tight range on Tuesday. However, the cross manages to hold above the 100-day SMA and is trading around 0.8650 at the beginning of the European session.

The EUR/GBP slide remains supported after recent comments from European Central Bank (ECB) policymakers pointing to a series of interest rate hikes. In fact, the president of the ECB, Christine Lagarde declared on Monday that inflation in the euro zone has not yet peaked. In addition, the head of the Dutch central bank, Klaas Knot, noted that the risk of doing too little is clearly more pronounced than that of doing too much.. This, together with the appearance of new selling around the dollar, continues to benefit the common currency and offers support for the cross.

Also, the not very optimistic outlook for the British economy they contribute to sterling underperforming and act as a tailwind for the EUR/GBP cross. However, this looks offset by expectations that the Bank of England (BoE) will continue to raise borrowing costs to combat persistent inflation. This mixed background, in turn, is preventing investors from taking aggressive directional positions and limiting the rise of the EUR/GBP cross. Market participants also look reluctant ahead of the release of preliminary German CPI figures and BoE Governor Andrew Bailey’s speech scheduled for Tuesday.

From a technical standpoint, repeated failures to find acceptance below the 100-day SMA warrant some caution for bears. That being said, the EUR/GBP pair’s inability to gain significant traction makes it prudent to wait for strong follow-through buying before confirming a short-term bottom and positioning for further gains.

Technical levels to watch

EUR/GBP

Overview
Last price today 0.8644
today’s daily change -0.0006
Today’s daily change in % -0.07
today’s daily opening 0.865
Trends
daily SMA20 0.8694
daily SMA50 0.8726
daily SMA100 0.862
daily SMA200 0.8535
levels
previous daily high 0.8676
previous daily low 0.8587
Previous Weekly High 0.8701
previous weekly low 0.8572
Previous Monthly High 0.8867
Previous monthly minimum 0.8572
Daily Fibonacci of 38.2% 0.8642
Daily Fibonacci of 61.8% 0.8621
Daily Pivot Point S1 0.86
Daily Pivot Point S2 0.8549
Daily Pivot Point S3 0.8511
Daily Pivot Point R1 0.8689
Daily Pivot Point R2 0.8726
Daily Pivot Point R3 0.8777

Source: Fx Street

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