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CFD Trading Rate Euro vs Great Britain Pound (EURGBP)

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  • 23.02.2024 08:56
    EUR/GBP unlikely to rally further in the near term – ING

    EUR/GBP has bounced back higher from the 0.8500 level. Nevertheless, economists at ING do not expect the pair to extend its rally.

    Strengthening domestic story

    The UK has continued to experience some repricing higher in growth expectations, as PMIs inched higher again in February. If the ECB had to convince markets that rate cut expectations were overly optimistic, the Bank of England has the ‘privilege’ of letting data do the talking.

    The rebound in EUR/GBP from the excessively cheap 0.8500 low did not surprise us. But we have some doubts the pair can rally further in the near term, as markets may be more inclined to push 2024 ECB easing expectations back to 100 bps (now 90 bps) rather than pricing in three full cuts in the UK (now, 62 bps). Still, our medium-term view remains bullish on the pair on the back of policy divergence.

     

  • 22.02.2024 06:27
    EUR/GBP rises to near 0.8570 after retracing recent losses, awaits PMI from UK, Eurozone
    • EUR/GBP edges higher after BoE’s Dhingra advocated for rate cuts.
    • Euro could experience pressure as a result of market caution stemming from diminishing expectations of reducing borrowing costs globally.
    • Thursday brings PMI data from the United Kingdom and the Eurozone.

    EUR/GBP recovers its recent losses on Thursday, trading higher around 0.8570 during the Asian session. On Wednesday, Swati Dhingra, a member of the Bank of England (BoE), suggested that delaying interest rate cuts could lead to increased living costs and potentially result in a harsh economic downturn for the United Kingdom (UK). Dhingra reiterated her argument in favor of implementing rate cuts.

    BoE Governor Andrew Bailey addressed the United Kingdom Parliament on Tuesday, noting the rapid decrease in inflation in the UK. He emphasized that the central bank doesn't necessitate a definitive return of inflation to target levels before contemplating interest rate cuts. Additionally, BoE Deputy Governor Ben Broadbent highlighted that wage growth and services inflation both exceed the rate, suggesting alignment with sustainable inflation at 2%.

    The Euro faced pressure, likely due to market caution amidst reduced expectations for early interest rate cuts globally. However, China's decision to reduce its five-year Loan Prime Rate (LPR) by 25 basis points (bps) to bolster its economy may offer some support for the Euro, considering the commodities' exports from the Eurozone to China.

    Meanwhile, the seasonal and non-seasonal adjusted ECB Current Account improved in December compared to the previous month. Additionally, ECB Negotiated Wage Rates (QoQ) increased in the fourth quarter of 2023. ECB President Christine Lagarde recently emphasized wages as "an increasingly important driver of inflation dynamics in the coming quarters."

    Traders are likely preparing for potential volatility surrounding the upcoming release of Purchasing Managers Index (PMI) data from both the Eurozone and the United Kingdom, scheduled for Thursday.

     

  • 21.02.2024 06:18
    EUR/GBP trades around 0.8560 after retreating from February’s high marked on Tuesday
    • EUR/GBP halts its five-day winning streak on Wednesday.
    • The Pound Sterling strengthens from the positive comments of BoE Governor Andrew Bailey.
    • The Euro depreciates as the market adopts caution due to reduced prospects for early rate cuts globally.

    EUR/GBP snaps its five-day winning streak, edging lower to near 0.8560 during the Asian session on Wednesday. The Pound Sterling (GBP) strengthens against the Euro (EUR) on the back of positive comments from the Bank of England (BoE) Governor Andrew Bailey.

    Governor Bailey and other policymakers testified before the United Kingdom Parliament on Tuesday. Bailey acknowledged that investors speculating on interest rate cuts this year are not unreasonable. However, he emphasized indicators suggesting that the British economy was rebounding following a recession in late 2023. Bailey also noted that rate cuts could precede inflation dropping below 2%, though he refrained from providing a precise timeline.

    BoE Deputy Governor Ben Broadbent highlighted that wage growth and services inflation are both double the rate, aligning with sustainable inflation at 2%. Broadbent further stated that the focus has shifted from the extent of restrictive monetary policy to its duration, but current data does not support rate cuts at this stage.

    The EUR/GBP cross receives pressure as the Euro faces challenges, possibly stemming from market caution amid reduced prospects for early interest rate cuts globally. Nonetheless, China's move to decrease its five-year Loan Prime Rate (LPR) by 25 basis points (bps) to bolster its economy could offer some backing to the Euro, given the close trade relations between China and the Eurozone.

    Traders are bracing for potential volatility surrounding the forthcoming release of Purchasing Managers Index (PMI) data from both the Eurozone and the United Kingdom, set for Thursday. ECB President Christine Lagarde emphasized the significance of wage data in determining the timing of monetary easing measures.

     

  • 20.02.2024 17:35
    EUR/GBP declined after Bailey’s words
    • The EUR/GBP pair stands at 0.8555, suffering mild losses in Tuesday's session.
    • Divergences between the ECB and BoE are driving the pair.
    • Markets are fully pricing in a cut by the BoE in August.

    In Tuesday's session, the EUR/GBP traded mildly lower at 0.8555 with the cross easing from daily highs following Andrew Bailey’s comments.

    The Bank of England (BOE) Governor Andrew Bailey warned on Tuesday that the bank need not wait for inflation to reach the target before cutting rates and other than that he didn’t provide any fresh guidance stating that “I can't say when or how much rates will be cut”. Current market expectations perceive virtually no chance of a cut on March 21, rising to nearly 25% by May 9 and rising past 60% by June 20. Rate reductions are fully priced in by August 1.

    On the European Central Bank (ECB) side, investors are seeing more easing than the BoE, between 100 and 125 bps, priced in to start in June. However, incoming data will shape the expectations and timing of the easing cycles.

    EUR/GBP technical analysis

    On the technical front, the Relative Strength Index (RSI) for the EURGBP pair shows a cooling momentum as it hovers within neutral territory. There's been a slight decrease in the daily RSI level suggesting a market slowdown. Meanwhile, as for the Moving Average Convergence Divergence (MACD), the histogram prints flat green bars, aligning with the RSI. Moreover, the overall trend is still negative as the pair trades below the 100 and 200-day Simple Moving Averages (SMA), but if the buyers hold above the 20-day average, the pair could see some additional upside.

    EUR/GBP daily chart

  • 19.02.2024 16:28
    EUR/GBP gains momentum on quiet Monday, bulls step in
    • The EUR/GBP stands at 0.8555 in Monday's session, jumping above the 20-day SMA.
    • Sticky European inflation may push the ECB to a more aggressive stance toward the easing cycle.
    • The week’s highlight will be the British and the EU’s Manufacturing PMIs from February.
    • As long as markets bet on the BoE starting its easing later than the ECB the upside may be limited.

    In Monday's session, the EUR/GBP was at 0.8555 amid anticipation of possible shifts in European Central Bank (ECB) policy, as recent indicators point towards revitalized wage growth and a surprising uptick in core inflation. However, markets are still betting on a sooner easing-cycle start than the Bank of England (BoE) which gives the Pound an advantage over the euro.

    In the Euro area, the inflation trend reversed partially in January when core inflation was above expectations at 3.3%, indicative of a strengthening Eurozone economy. There is speculation that resilient wage growth, as suggested by the ECB’s wage tracker, may contribute to stickier inflation which may push the bank to hold rates for longer. In that sense, if the European economies show strengths as the British economy, the Euro could partially strengthen. However, markets are still betting between 125-100 bps of easing from the ECB in 2024, vs the sub-100 bps of cutting from the BoE which could limit the upside. Incoming data will set the timing of the easing, and this week, markets will get key Manufacturing PMI readings from both economic blocks from February which could ignite volatility in the pair.

    EUR/GBP technical analysis

    Examining the Relative Strength Index (RSI), the EUR/GBP pair hints at a slightly positive outlook as the index hovers around the central mark, indicating restrained buying momentum. Recent transitions further validate this tilt, with the RSI shifting from deep negative to the 50 mark, indicating a possible shift in buyer power. However, the shifting trend is not markedly aggressive, suggesting a scope for volatility.

    On the other hand, the Moving Average Convergence Divergence (MACD) histogram, a measure to evaluate momentum, highlights green bars, which underscores growing buying momentum.

    Finally, the pair's position against its Simple Moving Averages (SMAs) implies a mixed bias in the short term. Despite being above the 20-day SMA, the pair still lingers below the 100 and 200-day SMA, signaling a considerable bearish presence. Hence, for the upward momentum to persist, bulls must increase their efforts.

    EUR/GBP daily chart

     

  • 16.02.2024 08:25
    EUR/GBP: 0.8500 may be the bottom – ING

    EUR/GBP remains close to the 0.8550 mark. Economists at ING analyze the pair’s outlook.

    Retail Sales posts strong rebound in January

    UK retail sales for January came in at 3.4% MoM, above all estimates. This follows some softer-than-expected GDP numbers on Thursday, which meant the British economy entered a recession in the latter part of 2023.

    The implications of activity data on the Bank of England’s policy outlook are not too deep. The focus remains on inflation (especially on services) and wage growth, and it does not seem likely that the BoE will turn significantly more hawkish only based on softer growth and without having reassurances on the inflation side first.

    The Pound seems to mirror this narrative, declining only modestly after GDP numbers on Thursday and gaining a little bit today. Still, we like the chances of a stabilisation first (0.8500 may be the bottom), and a rebound then in EUR/GBP, on the back of monetary policy mispricing in the UK and the Eurozone.

     

  • 15.02.2024 16:31
    EUR/GBP rises as UK Q4 GDP data weighs
    • The EUR/GBP is trading at 0.8560, showing a gain of 0.25, in Thursday's American session.
    • ECB President Lagarde was on the wires but didn’t offer any insights.
    • The Sterling is weak due to lower-than-expected Q4 GDP data.

    In Thursday's session, the EUR/GBP traded at 0.8560, showing a gain of 0.25% as the Sterling weakened due to softer-than-expected Q4 GDP data. However, the Bank of England (BoE) is expected to remain hawkish and the differing monetary policies with the European Central Bank (ECB) may eventually benefit the GBP.

    In line with that, while markets expect the first rate cut in June by the ECB, economists foresee 125 bp of total easing within the next year, a decrease from the 150 bp predicted entered February and in case investors start to see less easing, the pair could continue rising.

    Meanwhile, the UK saw its first consecutive quarters of contraction since early 2020, including a 0.3% QoQ decline in Q4, surpassing the 0.1% forecast. However, despite, the weak data, markets are expecting that the BoE won’t rush to cut rates, and as for now, the consensus is that the total easing will be between 75 bps and 100 bps in 2024. As long as the divergence between the BoE and ECB persists, the pound’s losses are limited.

    EUR/GBP technical analysis

    On the daily chart, the Relative Strength Index (RSI) for the EUR/GBP pair is currently near to jump to positive territory, indicating that buyers are gaining ground. In addition, the Moving Average Convergence Divergence (MACD) histogram has been consistently positive indicating that positive momentum is strong.

    However, it is important to note that the broader perspective, represented by the Simple Moving Averages (SMAs), still favors sellers as the pair trades below the 100 and 200-day SMAs. That being said, the bulls managed to jump above the 20-day average so for the short term, the outlook might start to turn positive for them.

    EUR/GBP daily chart

     

  • 15.02.2024 13:26
    EUR/GBP jumps above 0.8550 as UK shifts into a technical recession
    • EUR/GBP advances to 0.8550 as the UK economy remains in a recession in H1 of 2023.
    • The UK economy contracted by 0.3% in Q42023, while investors anticipated a growth of 0.1%.
    • The ECB continues to remain data-dependent for further monetary policy action.

    The EUR/GBP pair climbs above 0.8550 as the latest preliminary Q4 Gross Domestic Product (GDP) data from the United Kingdom Office for National Statistics (ONS) showed that the economy witnessed a de-growth by 0.3%.

    Surprisingly, the UK economy contracted by 0.3% in the last quarter of 2023, while investors forecasted a growth of 0.1%. In the July-September quarter, the UK economy was contracted by 0.1%. Two consecutive quarters of a slowdown in an economy confirms that it has fallen into a technical recession.

    This has prompted hopes of an early rate cut by the Bank of England (BoE) as the maintenance of interest rates at their current level could worsen the economic outlook. Meanwhile, lower-than-anticipated inflation data for January has also flared up expectations for quick rate cuts.

    Going forward, the BoE is expected to face a balancing act between a poor economic outlook and high persistent price pressures. On Wednesday, BoE Governor Andrew Baily said policymakers would discuss reducing interest rates after getting enough evidence about inflation declining towards the 2% target.

    On the Eurozone front, the Euro strengthens despite European Central Bank (ECB) President Christine Lagarde's reiterated need to remain data-dependent for upcoming monetary policy meetings. ECB Lagarde said weakness in economic activities is broad-based. When asked about the inflation outlook, Lagarde said the disinflation process is ongoing and expected to come down considerably this year.

     

  • 15.02.2024 08:24
    EUR/GBP: 0.8500 area will be major support – ING

    The UK headlines today will centre on the UK entering a technical recession. Economists at ING analyze Pound Sterling’s (GBP) outlook following UK Gross Domestic Product (GDP) data.

    GDP data not quite as bad as it looks

    The data is not quite as bad as it looks and the low -0.3% quarter-on-quarter decline in the fourth quarter of last year is largely down to revisions in October and November, while December actually surprised on the upside. With the UK services PMI recently heading higher, first quarter GDP for this year should be better. Understandably there will be a lot of focus on the January retail sales data on Friday after the sharp 3.2% MoM drop in December.

    However, it is fair to say that the Bank of England (and Sterling) are less driven by this activity data than they are by the price data. These should be on the turn lower now and we stick by our baseline view that this 0.8500 area in EUR/GBP will be major support and that a slightly more aggressive easing cycle from the BoE than the European Central Bank will take EUR/GBP a little higher later this year. 

    We should also keep an eye on the gilt market. There is a hint again that the UK government is committed to tax cuts but struggling to find funding. Any gilt underperformance could weigh on Sterling too.

     

  • 14.02.2024 09:24
    EUR/GBP: ECB cut before BoE would favour drop towards 0.8400 – SocGen

    EUR/GBP finally bounces after testing 0.8500. Economists at Société Générale analyze the pair’s outlook.

    A relief bounce is overdue

    In the UK, inflation data came in a tad better than forecast but services ticked up to a 3-month high of 6.5%. That’s not going to aid confidence at the BoE.

    EUR/GBP traded briefly below 0.8500 but a relief bounce is overdue. Targets will be lowered closer to 0.8400 if the ECB cuts rates before the BoE.

    Inability to cross above 0.8550 can lead to persistence in downtrend. Next potential supports are at projections of 0.8455/0.8440 and 0.8385.

     

  • 14.02.2024 07:13
    EUR/GBP attracts some buyers above the 0.8500 mark following UK CPI, PPI data
    • EUR/GBP holds positive ground around 0.8523 after the downbeat UK January inflation data. 
    • UK Consumer Price Index (CPI) rose 4.0% YoY in January vs. 4.2% expected. 
    • Traders anticipate 118 basis points (bps) rate cuts in 2024, down from the 145 bps expected at the start of February.
    • The Eurozone GDP growth numbers for Q4 and December Industrial Production will be closely watched by traders on Wednesday. 

    The EUR/GBP cross gains traction above the 0.8500 psychological mark during the early European trading hours on Wednesday. The weaker-than-expected UK economic data exerts some selling pressure on the Pound Sterling (GBP) and acts as a tailwind for EUR/GBP. The cross currently trades near 0.8523, adding 0.21% on the day. 

    The latest data from the Office for National Statistics on Wednesday showed that the UK Consumer Price Index (CPI) dropped 0.6% MoM in January from a rise of 0.4% in December, while the annual headline CPI rose 4.0% YoY, weaker than the expectation of 4.2%. The Core CPI, excluding volatile food and energy prices, climbed 5.1% YoY in January compared to the estimation of 5.2%

    The European Central Bank (ECB) chief economist Philip Lane said on Tuesday that the number and the exact timing of rate cuts will depend on how much progress the ECB makes towards its inflation target. Meanwhile, ECB Governing Council member Pablo Hernandez de Cos said that the central bank’s new outlook for inflation and economic growth in March will be pivotal in deciding when to begin easing monetary policy. 

    The ECB maintained the benchmark rates steady at a record high of 4% at its January meeting. The markets expect the first rate cuts in April or June. On Monday, traders trimmed bets on the expectation of rate cuts from the ECB, anticipating 118 basis points (bps) cuts in 2024, down sharply from the 145 bps expected at the start of February.

    Later on Wednesday, the Eurozone GDP growth numbers for Q4 and December Industrial Production will be due. The UK GDP growth numbers for Q4 will be released on Thursday. These events could trigger volatility in the market and give a clear direction to the EUR/GBP cross. 

     

  • 13.02.2024 18:04
    EUR/GBP declines as the Sterling benefits from robust UK labor market
    • The EUR/GBP trades at 0.8505, marking a 0.30% loss in Tuesday's session.
    • The Sterling gained due to the report of strong UK labor market data.
    • German ZEW survey signals improved Eurozone expectations.
    • Markets are still betting that the BoE’s rate cut cycle will start later than the ECB’s.

    In Tuesday's session, the EUR/GBP is seen at 0.8505, edging lower by 0.30% primarily influenced by robust UK labor market figures. Mixed macroeconomic signals from the German economy continue to shape the European Central Bank (ECB) while markets start to delay the start of the easing cycle for the Bank of England (BoE) to August.

    In line with that, labor data on Tuesday showed that the UK wage growth remained sticky, while the Unemployment rate was seen declining to 3.8% in the three months ending in December. On the EUR side, the German ZEW survey showed mixed signals with the positive take being that the expectations index improved in January.

    Regarding expectations, markets continue to bet on a more hawkish BoE as the resilience of the UK economy and the robustness of the labor markets justifies the delay of rate cuts. On the other hand uncertainty over the Eurozone’s economies makes markets think that the ECB will start the easing sooner. For the BoE, markets are betting for a first-rate cut in August while on the ECB’s side, in June.

    EUR/GBP technical analysis

    Starting with the daily chart, the Relative Strength Index (RSI) is in negative territory, with a declining trend suggesting that sellers are gaining momentum. The Moving Average Convergence Divergence (MACD) histogram also corresponds with this negative momentum, displaying a falling trend with green bars, hence indicating a bearish momentum.

    However, the hourly chart provides a more nuanced view. Here, the RSI remained in the oversold zone, but there's a subtle uptick, hinting at the possibility of some buyers stepping in. Yet, the MACD histogram showed red bars, although they were gradually becoming less negative, indicating a slow shift towards bullish momentum.

    Finally, considering the pair's position against the Simple Moving Averages (SMAs), the EUR/GBP is below the 20,100, 200-day SMAs, asserting that the overall trend is clearly bearish.

    EUR/GBP daily chart

     

     

     

  • 13.02.2024 13:22
    EUR/GBP finds cushion near 0.8500, downside remains favored on robust UK labor data
    • EUR/GBP finds support near 0.8500; more downside seems likely on upbeat UK Employment data.
    • The expectations of BoE rate cuts remain lower as the UK’s wage growth remains higher than expectations.
    • Eurozone’s ZEW Survey Economic Sentiment improves surprisingly for February.

    The EUR/GBP pair discovers an intermediate cushion near the psychological support of 0.8500 in the European session on Tuesday. The cross is expected to resume its downward journey as the United Kingdom Office for National Statistics (ONS) has reported upbeat employment data for three months ending December.

    The UK ONS reported that employers hired 72K workers, similar to reading in three months ending November. The Unemployment Rate drops sharply to 3.8% from expectations of 4.0% and the prior release of 4.2%.

    Meanwhile, wage growth grew at the weakest pace in more than a year but was higher than the expectations of market participants. Average Earnings including bonuses rose at a slower pace of 5.8% against the former release of 6.7%. However, economists projected a slower wage growth rate of 5.6%.

    Going forward, investors will focus on the UK inflation data for January, which will be published on Wednesday. The headline inflation is forecasted to grow by 4.2% from 4.0% in December. In the same period, the core inflation that excludes volatile food and Oil prices is anticipated to have risen by 5.2% against 5.1%.

    A stubborn inflation data and a higher wage growth rate than market expectations would push back expectations of early rate cuts by the Bank of England (BoE).

    On the Eurozone front, surprisingly, the ZEW Survey – Economic Sentiment for February rose to 25.0 from 22.7 in January. Investors projected the economic sentiment to fade to 20.1. This has brought some strength to the Euro but is insignificant to get underpinned against the Pound Sterling.

     

  • 13.02.2024 11:07
    EUR/GBP: A pullback to 0.8400-0.8500 range becomes a distinct possibility for first time since 2022 – SocGen

    EUR/GBP skids to six-month low of 0.8511. Economists at Société Générale analyze the pair’s outlook.

    UK wages reinforce BoE caution

    The BoE two weeks ago mentioned, like the Fed, it does not have the confidence yet on inflation to cut rates. That won’t change after earnings ex-bonuses slowed in December to 6.2% 3m/YoY, above forecast of 6.0%. November was revised up by 0.1ppt to 6.7%. 

    Employment rose by 72K. Payrolls, a notoriously volatile data series, expanded by 48K in January. December was revised up to +31K. 

    For EUR/GBP, a pullback to the 0.8400-0.8500 range becomes a distinct possibility for the first time since 2022.

     

  • 13.02.2024 07:16
    EUR/GBP remains under selling pressure above 0.8500 following UK labor market data
    • EUR/GBP attracts some sellers to 0.8524 following the upbeat UK labor market data on Tuesday.
    • The UK ILO Unemployment Rate dropped to 3.8% in three months to December from 4.2% in the previous reading, better than estimated.
    • Traders place bets on interest rate cuts from the ECB, expecting 118 basis points (bps) of cuts in 2024.
    • The Eurozone and German ZEW Survey will be due later on Tuesday.

    The EUR/GBP cross faces some selling pressure during the early European trading hours on Tuesday. The downtick of the cross is supported by the stronger-than-expected UK labor market data, which lifts the British Pound (GBP). At press time, EUR/GBP is trading at 0.8524, down 0.08% on the day. 

    The latest data from the UK Office for National Statistics on Tuesday showed that the ILO Unemployment Rate dropped to 3.8% in three months to December from 4.2% in the previous reading, above the market consensus of 4.0%. Meanwhile, the number of people claiming jobless benefits rose by 14.1K in January from a gain of 5.5K in December. The UK Employment Change came in at 72K in December, versus a 73K increase in November.

    In a busy week for UK economic data, the January Consumer Price Index (CPI) estimation indicates an increase in both headline and core rates. Furthermore, projections indicate that the release of the UK Q4 GDP growth numbers later this week may confirm a technical recession for the UK economy in the latter half of last year. 

    The Bank of England (BoE) governor Andrew Bailey downplayed the upcoming data that some experts forecast will prove the UK was in a technical recession at the end of last year. Bailey said the new BoE's latest forecasts suggested a "somewhat stronger growth story" ahead. If the report shows a weaker-than-expected outcome, this could exert some selling pressure on the Pound Sterling (GBP) and act as a tailwind for the EUR/GBP cross.

    On the Euro front, the European Central Bank (ECB) Governing Council member Fabio Panetta stated on Saturday that the time for a reversal of the monetary policy stance is fast approaching as disinflation is well underway. He added that inflation has declined rapidly, and cutting rates late but aggressively could cause market volatility. Traders anticipate 118 basis points (bps) of cuts in 2024 from the ECB, down from the 145 bps expected at the start of February.

    Market participants will focus on the UK CPI inflation and Producer Price Index (PPI), due on Wednesday. The preliminary UK GDP growth number for the fourth quarter will be released on Thursday, and the Retail Sales report will be published on Friday. On the Euro docket, the Eurozone and German ZEW Survey will be due on Tuesday. The Eurozone GDP numbers for Q4 will be due on Wednesday. Traders will take cues from these reports and find trading opportunities around the EUR/GBP cross. 


     

  • 12.02.2024 16:13
    EUR/GBP edges lower ahead of UK economic data
    • The EUR/GBP trades at 0.8532 reporting mild losses during Monday's session.
    • Impending release of UK's January CPI and Q4 GDP due on Wednesday and Thursday might exert pressure on GBP.
    • Markets anticipate the BoE to initiate rate cutting cycle later than Fed and ECB.
    • ECB's easing cycle is expected to kick off in April.

    In Monday's session, the EUR/GBP traded at a minimal loss at 0.8532. Underpinning the GBP stability is market anticipation of the Bank of England’s (BoE) delayed rate-cut cycle, overshadowing potential imminent UK economic headwinds. Conversely, inflation trends, coupled with easing cycle expectations, add an element of uncertainty for the Euro, potentially favoring EUR/GBP selling momentum.

    In line with that, the GBP might face headwinds due to the anticipated release of January Consumer Price Index (CPI) and Q4 Gross Domestic Product (GDP) numbers, with the potential of the latter confirming a technical recession from 2023. However, the GBP has had a robust start to 2024, second only to the USD amongst G10 currencies as market expectations hint at the BoE initiating a rate-cutting cycle later than the Federal Reserve (Fed) and European Central Bank (ECB). On Tuesday, labor market data from January and December will also be looked upon.

    For the ECB, markets bet on a 60% probability for a 25 bp rate cut in April and a total easing of 125 bp within the year.

    EUR/GBP technical analysis

    The Relative Strength Index (RSI) for the EURGBP pair is currently oscillating within the negative territory and the slope has been moderately positive, hinting at a slight shift of momentum from the sellers to the buyers over the recent days.

    However, the Moving Average Convergence Divergence (MACD) histogram is printing flat green bars indicating that despite some buying pressure, sellers are still dominant. On the hourly chart, the RSI is also maintaining its position within the negative territory, and the MACD histogram continues to print red bars indicating that in the immediate short term, the sellers are also in control.

    In the larger context, the EURGBP maintains its position below the 20, 100, and 200-day Simple Moving Averages (SMAs), reinforcing the dominant bearish outlook.

    EUR/GBP daily chart

     

  • 12.02.2024 08:38
    EUR/GBP struggles to recover above 0.8540 as focus shifts to UK data
    • EUR/GBP faces stiff pressure near 0.8540 ahead of UK data.
    • BoE Bailey is expected to provide fresh guidance on interest rates.
    • The ECB would ease key rates before the BoE.

    The EUR/GBP pair faces pressure while attempting to extend recovery above the immediate resistance of 0.8540 in the European session on Monday. The cross is expected to remain on the tenterhooks as investors await the United Kingdom Employment data for three months ending December, which will be published on Tuesday.

    Investors anticipate that the Unemployment Rate falls to 4.0% from 4.2% in three months ending November. In the same period, the Average Earnings, Excluding bonuses, are forecast to have grown at a slower pace of 6.0% against the former reading of 6.6%. A sharp decline in wage growth momentum would prompt expectations of rate cuts by the Bank of England (BoE).

    In today’s session, the speech from BoE Governor Andrew Bailey will be the focus. BoE Bailey will provide cues about likely monetary policy action in March.

    The Pound Sterling is expected to remain volatile as the UK’s inflation, factory, and retail sales data are lined up for release after Tuesday’s Employment data.

    The broader appeal for the Euro is weak against the Pound Sterling as investors hope that the European Central Bank (ECB) will start reducing key rates earlier than the BoE. Price pressures in the Eurozone economy are consistently declining. However, ECB policymakers will ensure that inflation will sustainably return to the 2% target before announcing rate cuts. ECB President Christine Lagarde anticipated that the central bank should consider rate cuts in late Spring.

     

  • 09.02.2024 16:31
    EUR/GBP bears return amid ECB and BoE's contrasting bets, eyes on British data
    • The EUR/GBP currently trades at 0.8536, reflecting minor losses on Friday.
    • The pair will tally a seven-week losing streak.
    • Focus is set on next week's British economic data including inflation and labor market reports.
    • A more hawkish stance of the BoE in relation to the ECB gives the Pound traction.

    On Friday's session, the EUR/GBP traded at 0.8536, posting mild losses amid contrasting monetary policy expectations from the European Central Bank (ECB) and the Bank of England (BoE) ahead of key economic figures of the British economy to be released next week. Meanwhile, the technical scenario remains bearish on the weekly and daily chart with bears gaining ground and tallying a seven-week selling spree.

    Adding to that, despite the ECB pushing back against market easing expectations, a 55% chance of an interest rate cut in April is still predicted. On the other hand, markets are expecting a potential uptick in inflation in the UK, with the Consumer Price Index (CPI) expected to have risen by 4.1% YoY in January, prompting a greater likelihood of the BoE delaying cuts. The inflation report is due on Wednesday and on Tuesday, the UK will release labor market figures which will also shape the expectations of the next decisions. As for now, markets are seeing 100 bps of easing by the British bank, and 125 bps of easing from its European peer, and as long as investors bet on more easing by the ECB, the pair could continue falling.

    EUR/GBP technical analysis

    From a technical viewpoint, the daily and weekly chart's negative direction of the Relative Strength Index (RSI) and the cross dwelling under its 20, 100, and 200-day Simple Moving Averages (SMAs) insinuate bearish dominance. This indicates that bearish momentum persists and selling pressure is primarily in control. The current seven-week losing streak of the pair also reinforces the negative outlook leaving the cross exposed for further downside.

    EUR/GBP weekly chart

  • 08.02.2024 16:22
    EUR/GBP gains some ground, upside limited by dovish ECB
    • The EUR/GBP currently trades at 0.8540, recording a 0.10% on Thursday.
    • Monetary policy divergences between the BoE and ECB will eventually benefit the GBP.
    • Markets are leaning toward a rate cut by the ECB in April while the BoE is seen starting in June.

    In Thursday's session, the EUR/GBP pair is seen at 0.8540, posting modest gains. The pair is receiving pressure from a dovish stance by the European Central Bank (ECB), tipping rate cut odds for April. Meanwhile, GBP maintains its undercurrent due to the Bank of England (BoE) monetary policy which seems to be pushing the easing cycle to June.

    Adding to that, markets currently price in about 65% odds for rate cuts to commence in April, predicting 125 bp worth of easing this year, despite ongoing resistance from ECB officials. On the other hand, for the BoE, investors anticipate about 100 bp of rate cuts in the next 12 months, beginning in June due to the recent economic figures which suggest that the British economy remains resilient. Moreover, as long as the UK's economy continues to show strength and markets delay the BoE's interest rate cuts, the cross may see further downside.

    EUR/GBP technical analysis

    The daily chart indicators indicate a possible dominance of buying momentum. The Relative Strength Index (RSI) is on a positive slope but in negative territory, revealing an increasing strength of the buying force. Concurrently, the Moving Average Convergence Divergence (MACD) shows rising green bars, suggesting that the bullish sentiment is taking hold. However, it's crucial to note that the pair is currently trading under the 20, 100, and 200-day Simple Moving Averages (SMAs), pointing towards the prevailing strength of the bears in a broader perspective. This situation proposes a challenging scenario for the buyers, despite the recent signs of a bullish recovery.

    EUR/GBP daily chart

     

  • 07.02.2024 08:41
    EUR/GBP declines toward 0.8530 as ECB rate-cut bets deepen
    • EUR/GBP falls to near 0.8530 as soft Eurozone data deepen ECB rate-cut bets.
    • ECB Cos is confident about inflation declining towards the 2% target.
    • UK companies are becoming optimistic about BoE’s rate-cut prospects.

    The EUR/GBP pair falls sharply to near 0.8530 on December's downbeat German Industrial Production data. The industrial output of the world’s fourth largest economy was down at a sharp pace of 1.6% monthly, while market participants projected a decline of 0.6%. In November, the economic data was contracted by 0.2%.

    The Eurozone economy is underperforming due to labor market, consumer spending and manufacturing activities. And, now, downbeat Industrial Production data has added to indicators deepening chances of early rate cuts by the European Central Bank (ECB).

    Odds of an early rate cuts by the ECB stemmed after policymaker Pablo Hernandez de Cos said on Tuesday, "it is already very important for European citizens to know that we are confident the next move will be a cut.” In the commentary, ECB Cos showed confidence in inflation declining towards the 2% target.

    On the contrary, ECB executive board member Isabel Schnabel said in late Asian session on Wednesday that the last mile in bringing down inflation towards the 2% target will be the most difficult one. Schnabel warned that early rate cuts could flare up price pressures again.

    Meanwhile, the Pound Sterling performs better against the Euro as the economic prospects of the United Kingdom's economy are improving again. UK service sector and construction companies have become more optimistic about fading recession risks and rate cuts by the Bank of England (BoE) amid easing price pressures.

     

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