- UK data triggers sharp decline in pound.
- The euro remains firm on expectations of a rate hike and after economic data.
- EUR/GBP with bullish bias, points towards 0.8600.
The EUR/GBP broke above 0.8500 and jumped up to 0.8585, reaching the highest level in a week and a half. It then pulled back and is trading at 0.8555. The weakness of the pound, the main bullish factor.
S&P Global data creates noise
The S&P Global Eurozone Manufacturing PMI figures were lower than expected in May, with the index hitting an 18-month low at 54.4, below the 54.7 expected; that of services fell to 56.3, against the expected 57.4. German indices showed services (58.5) falling after four tables and manufacturing rising (54.7) after three months.
The bad data from the Eurozone was overshadowed by an even worse report from the UK. The manufacturing index hit a 16-month low at 54.6 (consensus: 55.1) and the services index hit a 15-month low at 51.8 (57.3). The services sector had the largest decline since March 2020.
The UK data pushes back expectations of rate hikes by the Bank of England and hit the currency on all fronts. GBP/USD lost over a hundred pips in an hour.
Look at it at 0.8600
The rises of the EUR/GBP have a great barrier ahead that is 0.8600. A clearly higher daily close would enable more gains ahead in the medium term. Since October of last year, the cross has tested this level several times without being able to consolidate above it.
Technical levels
Source: Fx Street
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