EUR/GBP pares biggest daily fall in three weeks above 0.8400, focus on recession, politics

• EUR/GBP holds lower ground near two-week low as bears take a breather.
• Fears of Eurozone recession weigh on the Euro while GBP cheers political optimism during UK PM race.
• Survey showing deteriorating confidence among British employers weighs on Pound.
• Euro braces for more oil updates, Fed moves  amid a light calendar at home.

EUR/GBP licks its wounds as markets await the Fed’s verdict during early Wednesday in Europe. In doing so, the cross-currency pair snaps a three-day downtrend around 0.8420, bouncing off a fortnight low after posting the biggest daily loss since July 07.

The quote’s corrective pullback could be linked to the regional currency’s preparations for today’s Fed meeting, as well as hopes that the bloc’s policymakers will be able to secure an energy deal from Iran. That said, the old continent laid out plans to cut energy consumption over the next six months as Russia hints at the total blackout of gas supplies via the Nord Stream 1 pipeline. The region’s policymakers are also in talks with Iran and Nigeria to acquire energy resources.

Recently, Germany’s Gas Regulator's Chief said, per Reuters, that the next phase of a gas emergency may not need to be triggered in coming days and weeks as long as we can still add gas to storage.

On the other hand, a survey from the UK’s Recruitment & Employment Confederation showed that British employers are their most pessimistic about hiring and investment since the depths of the coronavirus pandemic crisis due to surging inflation and an acute shortage of workers to fill jobs.

Previously hopes that both the candidates for UK Prime Minister’s post, namely Lizz Truss and Rushi Sunak, are more serious joined the hopes of the Bank of England’s (BOE) aggressive rate hikes to propel the British pound (GBP).

It’s should be noted that a lack of major data/events also allows the EUR/GBP prices to consolidate recent losses ahead of the key Federal Open Market Committee (FOMC) meeting.

Technical analysis

Although a 10-week-old support line restricts immediate EUR/GBP downside near 0.8405, the pair buyers remain cautious unless witnessing a clear upside break of the 200-DMA hurdle, near 0.8445 by the press time.