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CFD Trading Rate Euro vs Great Britain Pound (EURGBP)

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  • 12.07.2024 09:02
    EUR/GBP depreciates to near 0.8400 due to stable political conditions in the UK
    • EUR/GBP extends its losing streak as the Pound Sterling displays strength due to stable political conditions in the UK.
    • This unexpected growth in the UK economy has diminished the likelihood of a BoE’s August rate cut.
    • The Euro may gain ground on the back of reduced concerns about a French financial crisis.

    EUR/GBP continues its losing streak for the third successive session, trading around 0.8410 during the European hours on Friday. The Pound Sterling (GBP) shows significant strength against its major peers following the outright victory of Keir Starmer’s Labour Party in the parliamentary elections, leading to the most stable political conditions in the United Kingdom (UK).

    The outlook for the British Pound has improved, as a stable government results in predictable fiscal policies, attracting significant foreign inflows. Additionally, the UK's new Chancellor, Rachel Reeves, pledges to stimulate growth and investment with a major focus on the supply side due to the limited scope of government spending.

    In May, the UK Gross Domestic Product (GDP) expanded by 0.4% month-over-month, surpassing market expectations of a 0.2% increase. This unexpected growth has diminished the likelihood of an August rate cut by the Bank of England (BoE). Additionally, the Bank of England Chief Economist Huw Pill emphasized that although a rate cut remains a possibility, concerns persist regarding high service prices and wage growth, according to Reuters.

    In Europe, the Euro has found support amid easing concerns of a French financial crisis following Marine Le Pen's far-right National Rally's inability to maintain dominance over French President Emmanuel Macron's centrist alliance and the left-wing New Popular Front led by Jean-Luc Melenchon.

    In addition to reduced fears of a French financial crisis, diminishing expectations of consecutive rate cuts by the European Central Bank (ECB) have stabilized the Euro's demand. Traders are scaling back bets on ECB back-to-back rate cuts as policymakers hesitate to commit to a specific path of rate reductions, concerned that an aggressive approach could reignite inflationary pressures.

    UOB Group FX analysts Quek Ser Leang and Peter Chia suggest the EUR/USD pair is likely to trade within a range of 1.0845 to 1.0900. They anticipate continued upward movement in the Euro, though achieving 1.0915 may take some time.

    Full article: EUR/USD may rise to 1.0915 in short term – UOB Group

    Euro FAQs

    The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

    The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

    Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

    Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

    Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

  • 11.07.2024 13:57
    EUR/GBP Price Analysis: Continues declining towards next downside target
    • EUR/GBP is falling to its next downside target at the June 14 low.
    • It is in a short and medium term downtrend with odds favoring a continuation lower. 

    EUR/GBP is steadily falling in a short-term downtrend. Given “the trend is your friend” it will probably continue until it reaches its next downside target at the level of the June 14 low at 0.8398. 

    EUR/GBP Daily Chart 

    The medium-term trend is also bearish after the break below the trendline in late May decisively reversed the trend which had hitherto been sideways. 

    A break below Thursday’s low at 0.8414 would add confirmation of a decline towards 0.8398. At that key support level the pair could potentially bounce – although it is at risk of going even lower after any pullback higher has run its course.

     

  • 11.07.2024 06:58
    EUR/GBP extends decline below 0.8450 as UK economy rebounds faster than expected
    • EUR/GBP extends the downside near 0.8425 in Thursday’s early European session. 
    • The UK GDP grew 0.4% MoM in May after stagnating in April, better than expected. 
    • Higher bets on the ECB rate cuts weigh on the Euro and cap the cross’s upside. 

    The EUR/GBP cross remains on the defensive around 0.8425 during the early European session on Thursday. The cross trades with mild losses after the monthly UK Gross Domestic Product (GDP) data. 

    The UK economy grew more than expected in May after stagnating in April, with the GDP expanding at 0.4% MoM. This figure beat market expectations of 0.2% in the reported period, according to National Statistics (ONS) on Thursday. The Pound Sterling (GBP) attracts modest sellers in response to the stronger UK data.

    The uncertainty surrounding the Bank of England's (BoE) decision to begin lowering its borrowing costs from the August meeting has risen. The BoE policymaker Catherine Mann signals caution on rate cuts, warning of a resurgence in UK inflation and rapid increases in service prices. Mann added that uncertainty about wage behaviour in the UK is unlikely to disappear soon, and policy decisions need to be robust to this.

    Meanwhile, BoE policymaker Jonathan Haskell said that he does not want to cut interest rates as inflationary pressures remain in the job market and it is unclear how rapidly they will fade. Investors are now pricing in nearly 60% odds that the BoE will cut interest rates on August 1, the first time since 2020. 

    On the Euro front, the European Central Bank (ECB) governing council member Fabio Panett said on Tuesday that the ECB can continue to lower interest rates, adding that wage growth, a central driver of inflation, was “not warranted.” Traders raise their bets on an ECB rate cut this year, which might cap the cross’s upside in the near term.

    GDP FAQs

    A country’s Gross Domestic Product (GDP) measures the rate of growth of its economy over a given period of time, usually a quarter. The most reliable figures are those that compare GDP to the previous quarter e.g Q2 of 2023 vs Q1 of 2023, or to the same period in the previous year, e.g Q2 of 2023 vs Q2 of 2022. Annualized quarterly GDP figures extrapolate the growth rate of the quarter as if it were constant for the rest of the year. These can be misleading, however, if temporary shocks impact growth in one quarter but are unlikely to last all year – such as happened in the first quarter of 2020 at the outbreak of the covid pandemic, when growth plummeted.

    A higher GDP result is generally positive for a nation’s currency as it reflects a growing economy, which is more likely to produce goods and services that can be exported, as well as attracting higher foreign investment. By the same token, when GDP falls it is usually negative for the currency. When an economy grows people tend to spend more, which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation with the side effect of attracting more capital inflows from global investors, thus helping the local currency appreciate.

    When an economy grows and GDP is rising, people tend to spend more which leads to inflation. The country’s central bank then has to put up interest rates to combat the inflation. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold versus placing the money in a cash deposit account. Therefore, a higher GDP growth rate is usually a bearish factor for Gold price.

     

  • 09.07.2024 14:31
    EUR/GBP Price Analysis: Step-declining towards next support level
    • EUR/GBP is falling towards its next downside target at the July 8 low. 
    • The pair is in a short and medium-term downtrend with odds favoring a continuation. 

    EUR/GBP is steadily falling step-by-step in a short-term downtrend that began after the pair filled the gap created on June 10 and rolled over. Given “the trend is your friend” it will probably continue. The medium-term trend is also bearish after the break below the trendline in late May.

    EUR/GBP 4-hour Chart 

    The next stop lower is 0.8431 (July 8 low), and a break below that would provide added bearish confirmation of an extension of the downtrend lower to the next target at 0.8399, the June 14 low. 

  • 09.07.2024 06:43
    EUR/GBP recovery to near 0.8450 appears stalling as France encounters hung Parliament
    • EUR/GBP lacks the strength to extend its recovery above 0.8450 as France faces political uncertainty.
    • ECB Knot supports for keeping interest rates steady in July but is open for the September meeting.
    • The Pound Sterling remains firm as UK Keir Starmer’s victory brings political stability.

    The EUR/GBP pair struggles to extend recovery above the immediate resistance of 0.8450 in Tuesday’s early European session. The upside in the cross appears to have been limited by French’s political uncertainty as the Left Wing, also known as New Popular Front, led by Jean-Luc Melenchon unexpectedly gained an upper hand with President Emmanuel Macron's centrist alliance and Marine Le Pen-led-Far Right National Rally as runner ups.

    Market participants expect that the Central Alliance will join hands with the Left Wing to form a coalition government, which will pass through significant negotiations for distribution of new ministers. While fears of widening French debt crisis have eased as Far Right fails to make an absolute majority, which was expected to have favored expansionary fiscal measures.

    On the monetary policy front, the debate about whether the European Central Bank (ECB) will deliver subsequent rate cuts is gaining traction. ECB officials are scheduled to meet on July 18. On Monday, ECB policymaker and Dutch central bank chief Klaas Knot said in an interview with Handelsblatt, I don't see a case for another rate cut in July." However, he said that he is comfortable with market expectations of more rate cuts this year and he is open for the September meeting.

    In the United Kingdom region, uncertainty over the Bank of England (BoE) 's decision to begin reducing interest rates from the August meeting has deepened. On Monday, BoE policymaker Jonathan Haskel supported leaving interest rates unchanged for as long as price pressures remain firm in the labor market. The UK’s wage growth is significantly higher than what is required to bring service inflation down.

    Meanwhile, the broader appeal of the Pound Sterling remains firm against the Euro. The absolute victory of Keir Starmer's Labour Party against Rishi Sunak's Conservative Party in UK parliamentary elections has brought political stability to the economy, which is favorable for the economy’s financial markets.

    Economic Indicator

    BoE's Haskel speech

    Jonathan Haskel will serve a 3-year term as a Bank of England Monetary Policy Committee member from September 2018, replacing Ian McCafferty. Professor Haskel is currently a Professor of Economics at Imperial College Business School, where he will continue to teach part-time, and prior to that was Head of the Economics Department at Queen Mary, University of London. He is a Non-Executive Director of the UK Statistics Authority and has expertise in productivity growth, and particularly intangible assets.

    Read more.

    Last release: Mon Jul 08, 2024 11:00

    Frequency: Irregular

    Actual: -

    Consensus: -

    Previous: -

    Source: Bank of England

     

  • 08.07.2024 14:54
    EUR/GBP Price Analysis: Downtrend resuming
    • The correction from the June 14 lows appears to have finished. 
    • EUR/GBP continues descending as the intermediate downtrend resumes. 
    • The pair now targets 0.8399. 

    EUR/GBP is resuming its medium-term downtrend after the correction higher from the June 14 lows appears to have peaked and rolled over. 

    Given “the trend is your friend” more weakness is foreseen. 

    EUR/GBP Daily Chart 


     

    A break below 0.8431 (July 8 low) would provide added bearish confirmation of an extension of the downtrend lower to the next target at 0.8399, the June 14 low.

     

  • 08.07.2024 08:17
    EUR/GBP moves above 0.8450 amid higher-than-expected German Trade Balance
    • EUR/GBP gains ground as German Trade Balance increases to €24.9 billion in May.
    • The Euro may struggle due to political uncertainty in France.
    • The Pound Sterling could limit its downside due to positive sentiment following the Labour Party's landslide victory.

    EUR/GBP edges higher to near 0.8460 during the early European session on Monday. This upside could be attributed to the higher-than-expected German Trade Balance. The trade surplus increased to €24.9 billion in May, surpassing the market expectations of €20.3 billion and the previous reading of €22.2 billion (revised from €22.1 billion).

    However, political uncertainty in France following the second round of parliamentary elections on Sunday exerted some selling pressure on the Euro (EUR), which might limit the upside of the EUR/GBP cross. According to The Economist, exit polls indicated that the left-wing New Popular Front (NFP), led by Jean-Luc Mélenchon, is on track to win the most seats, having secured at least 174 seats.

    Meanwhile, CNBC reported that Deutsche Bank strategists saying “Trying to build a government that has any kind of stability looks a very high bar this morning. Political paralysis for the next 12 months seems the most likely outcome.” They believe markets will be wary of the NFP's “fiscally aggressive” spending and taxation plans.

    In the United Kingdom (UK), the Pound Sterling (GBP) receives support due to positive sentiment following the Labour Party's landslide victory in the 2024 general election. Labour won 410 seats, a significant increase of 212 seats from the 2019 elections.

    In the absence of high-priority data from the UK, traders are likely to focus on the releases of BRC Like-For-Like Retail Sales on Tuesday and Gross Domestic Product figures on Thursday. These data points could provide fresh insights into British economic conditions.

    Euro PRICE Today

    The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.

      USD EUR GBP JPY CAD AUD NZD CHF
    USD   -0.02% -0.03% 0.10% -0.12% 0.13% -0.04% -0.06%
    EUR 0.02%   0.19% 0.45% 0.22% 0.30% 0.31% 0.29%
    GBP 0.03% -0.19%   0.23% 0.05% 0.11% 0.12% 0.09%
    JPY -0.10% -0.45% -0.23%   -0.21% 0.05% 0.02% -0.10%
    CAD 0.12% -0.22% -0.05% 0.21%   0.20% 0.07% 0.07%
    AUD -0.13% -0.30% -0.11% -0.05% -0.20%   0.00% -0.02%
    NZD 0.04% -0.31% -0.12% -0.02% -0.07% -0.01%   -0.02%
    CHF 0.06% -0.29% -0.09% 0.10% -0.07% 0.02% 0.02%  

    The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

  • 05.07.2024 10:10
    EUR/GBP Price Analysis: Signs the downtrend could be resuming
    • EUR/GBP forms a two bar reversal pattern and begins descending. 
    • This comes after price has filled a gap on the charts – another reversal sign. 
    • Evidence is building that the correction from the June 14 lows has rolled over and the intermediate downtrend is resuming. 

    EUR/GBP is potentially resuming its medium-term downtrend after correcting higher since the June 14 lows. 

    EUR/GBP Daily Chart 

    The pair has formed a two-bar reversal pattern at the peak of the correction, on July 1-2 (light blue rectangle) which is a bearish indicator. Two-bar reversals occur when price peaks and forms a green candle which is succeeded by a red candle of a similar shape and size. The fact that the day after the pattern was also bearish is further confirmation. 

    EUR/GBP 4-hour Chart


     

    A further indication the dominant downtrend is resuming is that EUR/GBP has filled the price gap that opened between 0.8472 and 0.8490 (red shaded area). This gap can be seen on the 4-hour chart above.

    It is said prices are often drawn to fill gaps and now they have there is more chance the downtrend will resume. 

    A break below 0.8458 (July 3 and June 28 low) would provide added bearish confirmation. 

    The next downside target would be the 0.8431 June 25 low. 

    Alternatively if the pair recovers, and breaks above 0.8499 (July 1) it could indicate a continuation of the correction higher, with the 50-day Simple Moving Average at 0.8517 providing resistance and the next target to the upside. 

     

  • 05.07.2024 06:27
    EUR/GBP weakens below 0.8500 amid weaker German Industrial Production, Labour Party wins UK election
    • EUR/GBP trades with a mild bearish bias around 0.8475 in Friday’s early European session.
    • Labour Party has won 337 seats in the parliamentary election, implying it now holds a majority in the House of Commons. 
    • Germany’s industrial sector contraction deepened in May. 

    The EUR/GBP cross trades with mild losses near 0.8475 on Friday during the early European session. The Pound Sterling (GBP) edges higher as the UK’s Labour Party led by Keir Starmer appears to be headed for a huge majority in the 2024 UK election, Reuters reported on Friday. Later in the day, Eurozone Retail Sales for May will be released. 

    The UK’s opposition Labour Party has won 337 seats in the parliamentary election, implying it now holds a majority in the 650-seat strong House of Commons, Reuters reported on Friday, citing broadcaster ITV. Derek Halpenny, head of FX research at MUFG Bank, believes that a Labour victory may benefit the Pound Sterling (GBP). A large majority would give Labour a strong mandate for governing and potentially lead to greater political stability.

    Nonetheless, the expectation that the Bank of England (BoE) will start reducing interest rates from the August meeting might drag the Cable lower. 

    On the Euro front, data released by  Destatis reported Friday that German Industrial Production for May came in weaker than the market expectation. The figure dropped 2.5% MoM in May from a decline of 0.1% in the previous reading. On an annual basis, the German Industrial Production fell 6.7% YoY in May

    The Euro (EUR) posts modest losses in response to the weaker in outputs of the German factories. Traders will take more cues from the Eurozone Retail Sale data, which is projected to improve to 0.1% YoY in May. 

     

    Pound Sterling FAQs

    The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, aka ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

    The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

    Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

    Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.


     

     

  • 04.07.2024 05:44
    EUR/GBP extends downside below 0.8500, all eyes on UK general election
    • EUR/GBP trades in negative territory for the third consecutive day around 0.8465 on Thursday. 
    • The outcome of the UK general election might potentially trigger some volatility in the Pound Sterling (GBP). 
    • The easing inflation in the Eurozone bolstered hopes for potential rate cuts by the ECB.

    The EUR/GBP cross extends the decline to near 0.8465 during the early European session on Thursday. The Euro edges lower as the softer Eurozone Harmonised Index of Consumer Prices (HICP) inflation report prompted the expectation of interest rate cuts from the European Central Bank (ECB). Market players will closely monitor the UK general elections on Thursday.

    The upcoming UK general elections might limit GBP movement ahead of the vote on Thursday before the results potentially trigger some volatility on the Pound Sterling (GBP) on Friday. Political analysts and surveys predict that Labour will win more seats than the record 418 it won when ex-leader Tony Blair ended 18 years of Conservative control in 1997.

    On the Euro front, the far right's hopes of winning outright in the French election fell on Tuesday, as centrist and left-wing candidates reluctantly banded together to stop Marine Le Pen's National Rally from seizing power for the first time, per Politico.

    Additionally, the annual inflation rate in the Eurozone eased in June. The Eurozone Harmonised Index of Consumer Prices (HICP) increased by 2.5% YoY in June, compared to a rise of 2.6% recorded in the previous month, according to preliminary estimates from Eurostat released on Tuesday. This figure spurred the hopes for potential interest rate cuts by the ECB, which dragged the shared currency lower and created a headwind for EUR/GBP. 

    Pound Sterling FAQs

    The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, aka ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

    The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

    Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

    Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

     

  • 03.07.2024 14:27
    EUR/GBP Price Analysis: Forms reversal pattern and begins falling again
    • EUR/GBP forms a two bar reversal pattern and begins descending. 
    • This follows price filling a gap on the charts – another reversal sign. 
    • The correction from the June 14 lows may have ended and a new leg of the intermediate downtrend could be evolving. 

    EUR/GBP has moved lower after filling the price gap that opened between 0.8472 and 0.8490 (red shaded area) during the steep decline of June 10. 

    The pair has formed a two-bar reversal pattern on July 1-2 (light blue rectangle) which is a bearish reversal sign. These patterns form after an up move when a green candle is succeeded by a red candle of a similar shape and size. The pattern indicates a reversal of sentiment at a peak. This and the gap-fill increase the odds the up move from the June 14 lows has finished. It is likely the pair is probably rolling over and entering a bearish phase. 

    EUR/GBP Daily Chart 

    Taken together with the fact that the pair seems to be in a medium-term downtrend and “the trend is your friend” the odds favor a resumption lower. 

    A break below 0.8457 (June 28 low) would add confirmation. 

    The next target below that would be the 0.8431 June 25 low. 

    EUR/GBP 4-hour Chart


     

    The Moving Average Convergence Divergence (MACD) on the 4-hour chart has crossed below its signal line during the reversal at the recent July 1 highs. This further indicates the correction may have run its course and is now turning lower. 

    It is still possible the pair could recover, however, and a break above 0.8499 (July 1) high would indicate a continuation of the correction higher, with the 50-day Simple Moving Average at 0.8517 providing the next resistance target to the upside. 

     

  • 03.07.2024 07:15
    EUR/GBP trades with mild losses below 0.8500 ahead of ECB’s Lagarde speech
    • EUR/GBP weakens to 0.8470 in Wednesday’s early European session. 
    • The uncertainty surrounding UK general elections and the BoE's rate cuts might cap the upside of GBP. 
    • Investors await the Eurozone PMI data for June and the ECB’s Lagarde speech on Wednesday. 

    The EUR/GBP cross trades on a softer note around 0.8470 during the early European session on Wednesday. The softer inflation in the Eurozone in June has spurred the hopes that the European Central Bank (ECB) will cut interest rates again this year, which exerts some selling pressure on the Euro (EUR). 

    The upcoming UK general elections might limit GBP movement ahead of the vote on Thursday before the results potentially trigger some volatility on Friday. Apart from this, the rising bets that the Bank of England (BoE) will cut the interest rate this year are likely to weigh on the British Pound (GBP). 

    The Eurozone flash Harmonized Index of Consumer Prices (HICP) came in at 2.5% YoY in June, in line with consensus expectations, Eurostat reported on Tuesday. Meanwhile, the core HICP increased 2.9% YoY in the same period, above the market consensus of 2.8%. ECB Chief Economist Philip Lane said that the incoming June data “seem to be in line with the ECB assessment” while also continuing to signal the possibility of further rate cuts.

    Later on Wednesday, investors will keep an eye on the Purchasing Managers Index (PMI) data from Germany, France, and the Eurozone. Also, the speeches from ECB’s Luis de Guindos, Piero Cipollone, Philip Lane, and Christine Lagarde will be the highlights on Wednesday.

    Euro FAQs

    The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

    The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

    Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

    Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

    Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

     

  • 02.07.2024 10:29
    EUR/GBP edges lower as mix Eurozone HICP keeps ECB’s policy outlook uncertain
    • EUR/GBP drops from 0.8500 after the annual Eurozone headline HICP decelerated expectedly to 2.5%.
    • ECB Muller sees further policy easing before year-end.
    • The BoE is expected to start reducing interest rates in August.

    The EUR/GBP pair falls back after failing to recapture the psychological resistance of 1.2500. The cross retreats after the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) report shows that price pressures were mixed in June.

    According to the preliminary HICP report, headline HICP decelerated expectedly to 2.5% year-on-year from May’s reading of 2.6%. In the same period, the core HICP, which strips off volatile items, grew steadily by 2.9%. Investors expected the underlying inflation to have declined to 2.8%. These inflation readings don’t provide any cues about where price pressures are heading and won't solve the interest rate outlook puzzle.

    Speaking at the European Central Bank (ECB) Forum on Central Banking on Monday, ECB President Christine Lagarde said that the central bank is not in a hurry to cut interest rates further.

    Meanwhile, ECB policymaker Madis Muller also advised to be patient with further rate cuts, said in Tuesday’s European trading hours. Muller added, “We can probably cut rates again before year-end.”

    On the political front, the smaller-than-expected lead of Marine Le Pen's far-right National Rally (RN) in the first round of France’s legislative elections against the Centralist alliance and Leftist has eased uncertainty over the deepening financial crisis. However, these fears could revamp again if the second-round runoffs result new government formation.

    In the United Kingdom (UK) region, easing price pressures have prompted expectations for the Bank of England (BoE) to begin reducing interest rates from the August meeting. The British Retail Consortium (BRC) showed on Monday that the annual shop price inflation grew at the slowest pace of 0.2% since October 2021 in June

    Economic Indicator

    Harmonized Index of Consumer Prices (YoY)

    The Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.

    Read more.

    Last release: Tue Jul 02, 2024 09:00 (Prel)

    Frequency: Monthly

    Actual: 2.5%

    Consensus: 2.5%

    Previous: 2.6%

    Source: Eurostat

     

  • 02.07.2024 06:08
    EUR/GBP holds positive ground above 0.8450 ahead of Eurozone inflation data
    • EUR/GBP gains momentum near 0.8490 in Tuesday’s early European session. 
    • The Euro gains ground after results from the first round of French elections.
    • Traders will keep an eye on the UK Parliamentary elections on Thursday.

    The EUR/GBP cross trades in positive territory for the fifth consecutive day around 0.8490 during the early European session on Tuesday. The Euro (EUR) edges higher after results from the first round of French elections suggested the far right would beat President Emmanuel Macron but fall short of winning an outright majority in parliament. Investors will closely watch the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for June, which is due on Tuesday.  

    Marine Le Pen’s far-right National Rally (RN) party won 33.15% in the first round of France’s parliamentary elections on Sunday, according to final results published Monday by France’s Interior Ministry. Meanwhile, French President Emmanuel Macron’s centrist alliance suffered staggering losses, coming third with 20.76% of the vote. The left-wing coalition of the New Popular Front (NFP) made a strong showing with 27.99% of the vote. 

    However, the RN might fall short of the 289 seats needed for an absolute majority, which lifts the shared currency against the Pound Sterling (GBP). BBVA's chief strategist Alejandro Cuadrado commented "In the event of Marine Le Pen's National Rally (RN) winning an absolute majority, the EUR could face additional short-term headwinds.”

    On the other hand, the GBP weakens as investors remain uncertain about the timeline that the Bank of England (BoE) will start cutting interest rates. Also, market players turn cautious ahead of the UK elections outcome on Thursday. The opposition Labor Party is expected to win from UK Prime Minister Rishi Sunak-led Conservative Party, according to the latest exit polls. 

    Euro FAQs

    The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

    The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

    Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

    Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

    Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

     

  • 01.07.2024 15:39
    EUR/GBP Price Analysis: After filling the gap price rolls over threatening more downside
    • EUR/GBP has risen and filled the price gap that was open between 0.8472 and 0.8490. 
    • There is a chance it may have completed its upside correction now and the downtrend could resume. 
    • A break below the June 28 low would help confirm a resumption lower. 

    EUR/GBP continues correcting back after bottoming at the 0.8398 June 14 lows. It has now filled a price gap on the charts (red shaded area) increasing the odds the correction may be near to completion. 

    EUR/GBP Daily Chart 

    Given the pair appears to be in a medium-term downtrend and “the trend is your friend” it will probably resume moving lower once the pull-back runs out of steam. A break below 0.8447 (June 28 low) would help confirm such a resumption. 

    The initial target for a move lower would be the 0.8399 June 14 low. 

    EUR/GBP 4-hour Chart


     

    The Relative Strength Index (RSI) on the 4-hour chart has exited overbought, further suggesting the correction may have run its course and be turning lower. When RSI exits overbought in a countertrend move such as that on EUR/GBP, it is often a reliable indicator the main trend is resuming. 

    Alternatively, a break above the 0.8499 highs would indicate a continuation of the correction higher, with the 50-day Simple Moving Average at 0.8517 providing the next resistance target to the upside. 

  • 01.07.2024 05:08
    EUR/GBP appreciates to near 0.8500 as French voters boost Marine Le Pen’s National Rally
    • EUR/GBP gains ground as investors’ sentiment improves due to Marine Le Pen’s National Rally leading the first round of legislative elections.
    • Last week, ECB Governing Council member Olli Rehn hinted that the central bank could reduce interest rates twice more in 2024.
    • The UK GDP (QoQ) recorded a 0.7% expansion in Q1, marking its strongest growth in over two years and mitigating expectations of rate cuts.

    EUR/GBP continues its upward trend for the third consecutive day, hovering around 0.8500 during Monday's Asian session. The Euro advances as investors’ sentiment improves amidst Marine Le Pen’s National Rally confirming its status as France’s leading political force in the initial round of legislative elections, marking the highest turnout in three decades. While Le Pen’s party secured a clear but not definitive victory, uncertainty prevails ahead of the second round of voting on July 7, as reported by France 24.

    Meanwhile, European Central Bank (ECB) Governing Council member Olli Rehn suggested last week that the central bank might cut interest rates twice more this year. Recent data showed that France's annual inflation rate matched expectations, slowing to 2.5%, while Spain's rate fell to 3.5%, slightly above forecasts. Conversely, Italy's inflation accelerated as anticipated to 0.9%. Moreover, Germany’s Consumer Price Index (CPI) data is scheduled for release on Monday.

    In the United Kingdom (UK), the upcoming general election on Thursday may induce volatility in the EUR/GBP cross. According to the latest exit polls, the Opposition Labour Party is anticipated to prevail over the Conservative Party led by UK Prime Minister Rishi Sunak.

    UK GDP (QoQ) figures have been upwardly revised, showing a 0.7% expansion in the first quarter, up from the previous quarter's 0.6% growth. This marks the strongest growth in over two years and has caused the UK's 10-year Gilt yield to rise to 4.17%, tempering expectations of rate cuts.

    Inflation FAQs

    Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.

    The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.

    Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.

    Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.

     

  • 27.06.2024 13:15
    EUR/GBP Price Analysis: Correcting within a medium-term downtrend
    • EUR/GBP is correcting in a medium-term downtrend. 
    • It has moved up to partially fill a price gap and will probably eventually fill the rest. 
    • A break below the June 25 low would signal a resumption of the dominant downtrend.

    EUR/GBP has corrected back after bottoming on June 14 at the 0.8398 lows. 

    The pair appears to be in a medium-term downtrend which, given “the trend is your friend” is likely to resume once the pull-back runs out of steam. A break below 0.8431 (June 25 low) would signal such a resumption. 

    EUR/GBP Daily Chart 

    The initial target for a move down would be the 0.8399 June 14 low. 

    The correction may still pull higher, however, as it has pulled all the way up to a gap (red shaded area). Gaps are normally filled eventually and there is, therefore, a risk of more upside evolving as price fills this gap.

    EUR/GBP 4-hour Chart 

    The top and bottom points of price gaps tend to represent support and resistance levels for price. As such, if price does fill the gap and reaches the top at 0.8490 there is a chance it could stall and roll over. 

     

  • 25.06.2024 12:37
    EUR/GBP trades lower as French election risks and weak German data weigh
    • EUR/GBP loses ground on the risks to the EU of a far-right victory in Sunday’s French elections. 
    • Weak German IFO data further weighs whilst the Pound gains some support from firm Retail Sales data. 
    • Pound Sterling manages to exorcize some of the dovishness from the BoE’s June meeting. 

    EUR/GBP is trading lower in the 0.8440s on Tuesday as the Euro (EUR) loses ground due to rising political risk premia amid concerns about the outcome of the French-election, whilst the Pound Sterling (GBP) finds support after recent UK Retail Sales data beat forecasts, easing expectations that the Bank of England (BoE) go ahead with interest-rate cuts in August, as is widely expected.

    EUR/GBP falls as French Election threatens European project

    The Euro is depreciating ahead of the French elections on Sunday June 30 when the French will vote in their next parliament. At the moment the far-right National Rally (RN) is in front with 34% of the vote and is projected to win 260 seats in the National Assembly, just short of the 289 needed for a clear majority to rule, according to Politico. 

    If National Rally wins the election it will be a massive setback for the European Union (EU), shake the foundations of the world order, and drive a wedge into the western alliance at the heart of NATO. 

    “An RN government would therefore be a dagger to the belly of Western as well as European unity. It would threaten Russian infiltration of the French — and therefore Western — intelligence services,” says John Lichfield, a contributor to Politico. 

    That said, at the moment the RN does not look like it will quite get a clear majority, resulting in what Lichfield calls an “utterly blocked parliament.”

    Underpar German data further weighs

    As far as macroeconomic data is concerned, the headline German IFO Business Climate Index which fell to 88.6 in June from 89.3 in May, coming in below the market expectation of 89.7. The Current Assessment Index, meanwhile, remained unchanged at 88.3, while the Expectations Index dropped to 89.0 from 90.4. This weaker German data puts more pressure on the Euro, further dragging the EUR/GBP cross lower.

    Traders will be watching preliminary inflation data for June in several major European economies, including France, Spain, and Italy, published on Friday, for hints of the trajectory for interest rates in Europe. ¡

    At its meeting in June, the European Central Bank (ECB) cut its key policy interest rate by 0.25% to 4.25%, however, further rate cuts are in the balance. Lower inflation would increase expectations of the ECB following up with further cuts and weigh on the Euro. Lower interest rates are negative for a currency because they attract less foreign capital inflows. 

    Pound exorcizes some of BoE-meeting’s dovishness

    The Pound Sterling, meanwhile, finds some support going into the new week after UK Retail Sales data out on Friday beat expectations and reduced bets the BoE will cut interest rates at its meeting in August. 

    Retail Sales in the UK soared 2.9% month-over-month in May, recovering from an upwardly revised 1.8% decline in April and much higher than forecasts of a 1.5% gain. It was the largest  increase in four months, with sales at non-food stores rising 3.5%, the most since April 2021, according to Trading Economics.

    The data popped some of the optimism that had expanded following the BoE’s June policy meeting. Although the BoE’s board of governors voted to keep its key policy interest rate unchanged at 5.25%, there were hints in the accompanying statement that the decision was “finely balanced” and might have swung either way. Markets took this as a sign that the BoE was closer to pressing the trigger on cutting interest rates than previously thought. 

    The meeting also followed the release of the latest Consumer Price Index (CPI) data for the UK, which showed headline inflation cooling to only 2.0% in May, from 2.3% in April and the lowest since July 2021. Although core inflation remained stubbornly elevated at 3.5%, the fall in the headline rate brought it into line with the Bank of England’s target, indicating inflation might be near a level where the BoE would see fit to reduce interest rates

     

  • 24.06.2024 10:57
    EUR/GBP bulls need patience – ING

    We believe the Bank of England (BoE) took a step in the direction of an August rate cut last week, even though core policy communication did not change meaningfully, FX Strategist at ING Francesco Pesole notes.

    GBP looks more likely to display weakness

    “Markets remain undecided on an August move (14bp priced in) and in our view, are also still too conservative on the total easing this year with 47bp versus our call for 75bp. Our dovish BoE view means a bearish call on the Pound Sterling (GBP), this summer. We could also see some negative spillover on GBP from the UK election.”

    “However, political uncertainty currently weighs more on the Euro (EUR) than on the GBP, and that’s why we think a re-appreciation in EUR/GBP beyond 0.8500 has likely been delayed. We see wide upside room for the pair once the EU political noise has settled due to monetary policy convergence.”

    “GBP looks more likely to display weakness against the US Dollar (USD) in the near term, and we expect a move to below 1.25 in Cable in July. This week’s calendar is very quiet in the UK data-wise, and there are no BoE speakers scheduled for now.”

  • 24.06.2024 08:41
    EUR/GBP stays above 0.8450 due to heightened expectations of BoE’s rate cut in August
    • EUR/GBP gains ground as the BoE dovish pause increased expectations for a rate cut in August.
    • The Euro could struggle due to uncertainties surrounding the outcome of a snap election in France.
    • The headline German IFO Business Climate Index fell to 88.6 in June from 89.3 in May.

    EUR/GBP extends its gains for the third successive session, trading around 0.8460 during the European session on Monday. The British Pound (GBP) remains under pressure following the Bank of England's (BoE) dovish pause last week, which increased expectations for an interest rate cut at the August monetary policy meeting.

    Thursday’s BoE statement and minutes indicated that officials are nearing a decision to cut interest rates, as noted by ING’s FX Strategist Francesco Pesole. Pesole mentioned that "three rate cuts in 2024 starting from August remain ING’s base case," which is more dovish compared to the two cuts currently priced in by the market.

    Additionally, the flash UK PMIs released on Friday showed that private sector business activity in June expanded at its slowest rate since last November. This has exerted further pressure on the Pound Sterling, bolstering the EUR/GBP cross.

    The EUR/GBP cross may limit its upside as the Euro could struggle due to uncertainties surrounding the outcome of a snap election in France, fueling concerns that a new government might worsen the fiscal situation in the Eurozone's second-largest economy.

    On Monday, the headline German IFO Business Climate Index fell to 88.6 in June from 89.3 in May, coming in below the market expectation of 89.7. The Current Assessment Index remained unchanged at 88.3, while the Expectations Index dropped to 89.0 from 90.4. This weaker German data could put pressure on the Euro, further limiting the upside of the EUR/GBP cross.

    EUR/GBP

    Overview
    Today last price 0.8461
    Today Daily Change 0.0005
    Today Daily Change % 0.06
    Today daily open 0.8456
     
    Trends
    Daily SMA20 0.8476
    Daily SMA50 0.8531
    Daily SMA100 0.8542
    Daily SMA200 0.8593
     
    Levels
    Previous Daily High 0.8465
    Previous Daily Low 0.8443
    Previous Weekly High 0.8465
    Previous Weekly Low 0.8429
    Previous Monthly High 0.8621
    Previous Monthly Low 0.8484
    Daily Fibonacci 38.2% 0.8457
    Daily Fibonacci 61.8% 0.8451
    Daily Pivot Point S1 0.8444
    Daily Pivot Point S2 0.8432
    Daily Pivot Point S3 0.8422
    Daily Pivot Point R1 0.8467
    Daily Pivot Point R2 0.8477
    Daily Pivot Point R3 0.8489

     

     

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