- EUR/GBP weakens near a fresh monthly low hit on Wednesday.
- Expectations of further rate hikes from the Bank of England benefit the GBP and seem to limit the pair.
- The bears could try to challenge the support of the 100-day SMA near the 0.8745 zone.
He EUR/GBP enters a bearish consolidation phase and is trading in a tight range near a fresh monthly low hit earlier this Wednesday at 0.8785. The crossing is located currently around 0.8815 and looks vulnerable to extending its recent pullback from its highest level since September 2022, touched earlier this month.
UK PMI indices released on Tuesday indicated that business activity rose more than expected in February and fueled optimism that the country can avoid a sharp economic recession. This, in turn, raises expectations of further interest rate hikes by the Bank of England (BoE), which continues to support the British pound and acts as a headwind for the EUR/GBP cross.
By contrast, the Eurozone PMI showed that business activity in the manufacturing sector deteriorated this month. On the other hand, the markets already appear to have fully discounted additional rate hikes by the European Central Bank (ECB) in the coming months. This, along with the sustained buying around the US dollar, is weighing on the common currency and favors EUR/GBP bears.
The fundamental background mentioned above suggests that any recovery attempt could still be seen as a selling opportunity and risks fading rather quickly. The EUR/GBP looks poised to roll lower to test the support of the 100-day SMA, currently around the 0.8745 zone. This is closely followed by the yearly low, around the 0.8720 area, which if broken decisively will pave the way for another move lower.
EUR/GBP technical levels to watch
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.
