- Euro reversal from 0.8900 area finds support at 0.8750.
- The pound appreciates while the Sunak weighs the market.
- EUR/GBP likely to hit 0.90 in coming months — SocGen.
The EUR has trimmed gains on Tuesday against a stronger British pound, buoyed by market enthusiasm for the arrival of Rishi Sunak to the Presidency of the Government.
The pair has reversed Monday’s gains pulling back from levels near 0.8760 to session lows in the 0.8665 area, where it appears to have found support to consolidate below 0.8700.
Pound recovers as Sunak calms markets
The first speech of the new Prime Minister of the United Kingdom, Rishi Sunak, in which he promised to restore economic stability, has restored confidence to the markets. Additionally, the reappointment of Jeremy Hunt as Chancellor of the Exchequer has raised hopes of a market-friendly cabinet, which has boosted the pound overall.
On the macroeconomic docket, the German IFO Business Climate Index showed sentiment largely unchanged from the previous month. These figures have gone virtually unnoticed, as attention is focused on the outcome of the ECB’s monetary policy meeting, scheduled for next Thursday.
EUR/GBP expected to approach 0.90 — SocGen
Looking at the bigger picture, Kit Juckes, Global Chief Currency Strategist at Société Générale, sees the pair moving towards 0.90: “With the economy surely already in recession and poised to suffer from possibly even tighter fiscal policy, it is little sterling is likely to enjoy a relief bounce and over time eur/gbp is likely to slowly meander to 0.90 or so.”
Technical levels to watch
Source: Fx Street
With 6 years of experience, I bring to the table captivating and informative writing in the world news category. My expertise covers a range of industries, including tourism, technology, forex and stocks. From brief social media posts to in-depth articles, I am dedicated to creating compelling content for various platforms.
