EUR/GBP rises to highest since December, approaches 0.8600

• The pound remains under pressure, still hit by the BoE meeting.
• Euro among top performers on Friday.
• EUR/GBP posting a weekly gain of almost 200 pips, the best in months.

The EUR/GBP rose further on Friday and climbed to 0.8590, reaching the highest intraday level since December. It then pulled back to 0.8565. Over the last two days, it gained more than 150 pips

The cross is about to post the highest weekly close since October, the biggest gain in months. The technical outlook has improved dramatically for the euro, that faces 0.8600 as the next critical resistance. The 20-week moving average at 0.8375 is now a critical support. The line is turning flat and could turn positive for the first time since 2020.

A tough week for GBP

The pound is about to end the week with losses across the board weakened, particularly after the Bank of England meeting. The central bank announced a rate hike on Thursday from 0.75% to 1.00% as expected. Market participants put their attention on forward guidance and it was not clear. Three members asking for a rate hike of 50 basis points were offset by two members arguing it would be appropriate to remove the forward guidance on future hikes.

While the pound remains under pressure, the euro received support from talk regarding the European Central Bank with more board members speaking about rate hikes and even a positive rate by year-end. Those comments helped the euro on Friday.

Analysts at Danske Bank expect EUR/GBP to remain rangebounded around 0.84. “On the one hand, a re-pricing of Bank of England (and perhaps a more hawkish ECB) is likely to weigh on GBP but on the other hand GBP usually appreciated vs EUR in an environment where USD performs.”

Technical levels