EUR/GBP rises sharply above 0.8350 from almost two-year lows

• The euro rises significantly on Friday against the pound and erases weekly losses.
• EUR/GBP recovers key levels, although the dominant trend remains down.

EUR/GBP is rising on Friday, posting one of the biggest daily gains in weeks. It does so after registering on Thursday at 0.8304, the lowest level in almost two years. The cross reached a daily high at 0.8360 and remains above 0.8350.

The euro’s rebound comes from the 0.8300 support zone and implies a relief after a bearish rally that lasted three days. The rallies are currently a brake at the 20-day moving average, which is passing through 0.8360. On a daily close above, EUR/GBP could extend gains towards 0.8380 initially. The next resistance is at 0.8415.

The dominant trend remains down, and the current bounce can still be seen as a healthy correction. If they manage to finish the week with gains, the euro would cut a streak of six consecutive weeks with losses.

The pound is among the weakest currencies on Friday, affected in part by the deterioration in equity markets. In addition, the bad economic data that was known from the United Kingdom contributed. In December, retail sales fell 3.7%, the worst month since January 2021.

As far as the euro is concerned, the preliminary reading of business confidence from the Eurozone. In addition, the president of European Central Bank (BCE), Christine Lagarde, will present in a virtual meeting. On Thursday, Lagarde claimed that the ECB will not act as fast as the Fed, this had given EUR/GBP further downside; particularly given the expectation of interest rate hikes by the Bank of England at the next meeting.

Technical levels