- EUR/GBP rebounds from lows near 0.8380.
- United Kingdom: annual inflation reaches 10.1% in July.
- Advanced GDP reading for the second quarter of the Eurozone increased 3.9% year-on-year.
After a decline towards the nearby 0.8380, the EUR/GBP recovered and in the last hour accelerated to the upside reaching daily highs at 0.8418, while GBP/USD falls decisively below 1.2100.
EUR/GBP remains supported by the 0.8350 area
EUR/GBP has so far left behind three consecutive daily pullbacks from the monthly high just below 0.8500 on 12 Aug. The break of the 200-day simple moving average – today at 0.8430 – opened the door for more weakness in the coming days, although the euro seems to want to recover that zone.
In this way, the cross reverses the initial low towards the 0.8385/80 band after the boost of the British pound following the publication of the UK inflation figures for the month of July. According to the latter, headline inflation increased to 10.1% annually in July after rising 0.6% in the month.
The initial reaction to the CPI release prompted investors to forecast further (and higher?) rate hikes by the Bank of England (BoE) at its upcoming meetings, which in turn led to further hikes in the pound . However, the BoE’s latest dovish trend and the prospect of a 15-month recession in the UK economy threaten a strong pound going forward.
Another report showed a revision to the GDP figures for the second quarter of the Eurozone, which showed a GDP growth of 3.9% year-on-year.
key levels
The cross is gaining 0.13% at 0.8415 and faces the next hurdle at 0.8434 (200 SMA), followed by 0.8492 (Monthly High Aug 12) and then 0.8584 (Weekly High Jul 21). On the other hand, the break of 0.8386 (weekly low Aug 17) would expose 0.8339 (monthly low Aug 2) and finally 0.8249 (monthly low Apr 14).
Source: Fx Street
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