- The pound suffers a historic drop on Friday.
- British bonds also fall significantly.
- EUR/GBP is above 0.8800 and GBP/USD is close to 1.1000.
The EUR/GBP soared on Friday in the face of a risk-off climate and a general slump in the British pound. The cross climbed to 0.8849, the highest level since January 2021. It then moderated gains and is trading at 0.8810.
The advance was mainly due to a collapse in the British pound. The presentation of a plan to reduce taxes, to be financed with new debt in the United Kingdom, caused bonds and the pound, which had already been under pressure, to fall. GBP/USD hit new all-time lows and tumbled to 1.1017.
The other negative factor for the British currency is the climate of risk aversion in the markets, which are registering significant falls. EUR/GBP gains have provided some relief to the decline in EUR/USD and EUR/CHF.
Should the EUR/GBP correction extend, next support is at 0.8785, followed by 0.8725. To the upside, the 0.8850 area is the level to break to enable further upside: this is medium-term resistance, which may be difficult to break.
Technical levels
Source: Fx Street
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