EUR/GBP finds a foothold and takes a fresh run at 0.8600 after UK earnings miss the mark

• EUR/GBP sees Tuesday gains for a fresh test of 0.8600.
• UK earnings miss the mark, EU sentiment improves sharply.
• The pair remains deeply bearish, with the momentum bias leaning bullish.

The EUR/GBP legged back into the 0.8600 handle on Tuesday, bolstered by a miss in UK Average Earnings and a better-than-expected print in the Eurozone’s ZEW Economic Sentiment Survey.

The UK’s Average Earnings, both including and excluding bonuses, missed market estimates on Tuesday, printing below expectations and softening the Pound Sterling (GBP) against the Euro (EUR).

UK Average Earnings Excluding Bonuses for the quarter ended in October showed earnings climbed 7.3% compared to the same time last year, coming in below market forecasts of 7.4% and slipping back from the previous period’s 7.8% (revised up slightly from 7.7%, further widening the gap).

UK Average Earnings Including Bonuses similarly declined, printing at 7.2% versus the forecast 7.7% and reversing direction on the previous period’s 8%, which was similarly revised upwards from 7.9%.

UK Claimant Count Change in November beat market expectations, but still printed worse than the previous month, showing 16K additional jobless benefits seekers versus the forecast 20.3K; October had 8.9K new claimants, which was revised sharply lower from 17.8K.

The Eurozone’s ZEW Economic Sentiment Survey beat expectations to print at a firm 23.0, handily climbing over the forecast 12.0 and vaulting above the previous month’s 13.8.

Market focus to shift to BoE, ECB double feature

Wednesday will take a slight breather with mid-tier Industrial Production from both the UK and the EU before Thursday’s double-header showing from both the Bank of England (BoE) and the European Central Bank (ECB).

Both central banks are broadly expected to hold steady on rates, and investors will be taking a close look at both banks’ policy statements to try and draw a bead on just how hawkish or dovish a stance the BoE and ECB are taking heading into the new year.

EUR/GBP Technical Outlook

The Pound Sterling’s (GBP) early slump on Tuesday sees the Euro (EUR) catching a bid and sending the EUR/GBP back into the 0.8600 handle. Price action is drawing tight once more and the pair is struggling to maintain a hold on the key level, but intraday bids are catching technical support from the 200-hour Simple Moving Average (SMA) near 0.8580.

Despite Tuesday’s bullish bump, the EUR/GBP remains steeply bearish, weighed down near multi-month lows with price action trading well below the 200-day SMA drifting into the 0.8660 level.

0.8560 is hardening into a firm price floor keeping bearish momentum constrained for the time being, while bullish plays will see a hard barrier near 0.8620.

EUR/GBP Hourly Chart

EUR/GBP Daily Chart

EUR/GBP Technical Levels