- EUR/GBP gains ground for the third day in a row on Friday.
- The surprise pause in the Bank of England’s rate hike weakens the Pound and lends support to the pair.
- The dismal German PMI indices prevent bulls from opening new positions and limit the pair’s gains.
The EUR/GBP cross attracts some buying near the 0.8660 area on Friday and maintains its modest intraday gains during the early part of the European session. The pa is moving around the 0.8680 area, with an increase for the third consecutive day and fifth in the previous six, although it lacks continuation and below the two-month high reached on Thursday.
The relative underperformance of the British Pound (GBP) could be attributed to the Bank of England’s (BoE) surprise pause on Thursday, which in turn is seen as acting as a tailwind for the EUR/GBP cross. In fact, the British central bank ended a streak of 14 consecutive interest rate hikes following the recent slowdown in inflation, signs of cooling in the British labor market and renewed recession fears. The Bank of England’s Monetary Policy Committee voted 5-4 in favor of keeping the main rate at the highest level in 15 years, 5.25%.
Additionally, UK macroeconomic data released today is less supportive of the Pound Sterling and lends additional support to the EUR/GBP cross. The UK’s Office for National Statistics reported that retail sales rebounded and increased by 0.4% in August, following a sharp fall of 1.1% the previous month. The rise, however, was slightly less than the 0.5% growth forecast. That said, the European Central Bank’s (ECB) dovish decision on interest rates last Thursday keeps any significant appreciative movement at bay for the EUR/GBP cross.
The ECB chose to raise interest rates for the tenth consecutive time, by 25 basis points, placing its main rate at an unprecedented level of 4%. However, the lowering of CPI and GDP growth forecasts for 2024 and 2025 suggests that the 14-month monetary policy tightening cycle may have already reached its peak. Separately, a private survey showed a continued decline in German business activity for a third straight month in September and stoked concerns about a deep economic contraction, suggesting further increases could be off the table for now.
The EUR/GBP cross, for its part, reacted little to the uninspiring Eurozone PMI figures. However, the pair remains on track to post gains for the third consecutive week, also marking the fifth week of a positive finish in the previous six. Bulls, for their part, will likely wait for sustained strength above the 0.8700 round level, near the technically significant 200-day SMA, before opening new positions.
EUR/GBP technical levels to watch
|Latest price today
|Today I change daily
|Today’s daily variation
|Today’s daily opening
|Previous daily high
|Previous daily low
|Previous weekly high
|Previous weekly low
|Previous Monthly High
|Previous monthly low
|Daily Fibonacci 38.2
|Fibonacci 61.8% daily
|Daily Pivot Point S1
|Daily Pivot Point S2
|Daily Pivot Point S3
|Daily Pivot Point R1
|Daily Pivot Point R2
|Daily Pivot Point R3
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.