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EUR/GBP remains negative near 0.8500 after Eurozone and UK PMIs

  • EUR/GBP is seeing some selling on Friday and has now erased the previous day’s gains after the ECB.
  • The risk of a sovereign debt crisis and fears of a recession put pressure on the common currency.
  • Expectations for a BoE rate hike of 50 basis points in August benefit the British pound and add to the selling bias in the pair.

The crossing EUR/GBP it extends the previous day’s pullback from the post-ECB high in the 0.8585 region, or the highest level since July 6, and sees some continuation selling on Friday. Pullback extends into European session, though finds some support just below the psychological level of 0.8500.

The common currency’s relative underperformance comes amid a lack of specific details, conditionality and what would justify the activation of the ECB’s anti-fragmentation tool. In addition, the recent widening of the Italian and German government bond yield spread the risk of a sovereign debt crisis has increased. This, coupled with growing fears of a recession, are overshadowing the ECB’s big 50 basis point rate hike on Thursday and putting downward pressure on the EUR/GBP cross.

Intraday sales picked up after the release of disappointing Eurozone PMI data. The preliminary report on manufacturing activity from S&P Global/BME research showed that recession in German manufacturing and services sectors accelerated in July. Indeed, the Eurozone economic powerhouse’s manufacturing PMI slumped to a 25-month low and the services PMI fell to the lowest level in seven months. Furthermore, the eurozone manufacturing PMI also unexpectedly contracted in July.

Secondly, sterling was supported by better-than-expected preliminary UK PMI data for July. In addition, the possibility that the Bank of England will raise interest rates by 50 basis points in August is another factor that has helped support the pound sterling. This, in turn, supports the prospects for a further short-term bearish move.

EUR/GBP technical levels

EUR/GBP

Overview
last price today 0.8512
daily change today -0.0029
Today’s daily variation in % -0.34
Daily opening today 0.8541
Trends
daily SMA20 0.8536
daily SMA50 0.8536
daily SMA100 0.8462
daily SMA200 0.8444
levels
Previous daily high 0.8586
Previous Daily Low 0.8493
Previous Weekly High 0.8514
Previous Weekly Low 0.8404
Previous Monthly High 0.8721
Previous Monthly Low 0.8486
Daily Fibonacci of 38.2% 0.8551
Daily Fibonacci of 61.8% 0.8529
Daily Pivot Point S1 0.8494
Daily Pivot Point S2 0.8447
Daily Pivot Point S3 0.8401
Daily Pivot Point R1 0.8587
Daily Pivot Point R2 0.8633
Daily Pivot Point R3 0.8679

Source: Fx Street

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