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Free AccessEUR/GBP Still Unable to Close Below Significant 0.8500 Support
- EURUSD (+0.14%) remains bid following the Eurozone inflation data and trades at the top end of its relatively narrow two-day range. In similar vein, EURGBP (+0.20%) has had a near 30 pip bounce from session lows, assisted by the moderate repricing of ECB cuts which now leaves ~4bp fewer cuts priced through year end when compared to yesterday’s close.
- Overall conditions for EURGBP remain unchanged and a bearish theme is in play. Key supports have recently been pierced; the 0.8500 pivot level, and an important support zone between 0.8498, the Feb 14 low, and 0.8493, the Aug 23 ‘23 low. We have pointed to a clear break of these price points as strengthening the bearish technical theme.
- However, despite multiple tests below the key 0.8500 mark, both this week and across the past year, EURGBP has been unable to close below this level since August 2022. A stronger recovery would target initial firm resistance at 0.8540, the 20-day EMA. Above here, the Apr 23 high and bull trigger is at 0.8645.
- Next week’s key event risk will be the ECB decision as markets try to gauge expectations for future policy decisions, with today’s data pointing towards a cautious/hawkish hold. In the background, despite betting markets expecting a smooth Starmer victory on July 04, both the expectation of an increase in political noise and the prospects of a Labour government for the UK economy might continue to pose downside risks for sterling.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.