EUR/GBP rises above 0.8600 for the first time since early July

• Euro among top performers on Tuesday on ECB rate hike expectations.
• Pound under pressure amid risk aversion.
• EUR/GBP gains more than 170 pips during the last three trading days.

The EUR/GBP accelerated the move to the upside and jumped to 0.8601, reaching the highest level since July 6. While the euro is among the best performers, the pound is under pressure amid risk aversion.

No more range

The rally in EUR/GBP started on Friday, on the back of comments from European Central Bank officials suggesting a 75 basis points rate hike at the next meeting. On Tuesday, Governing Council members Muller and Knott spoke about the possibility of a significant hike, boosting the euro further.

The pound is under pressure across the board. Cable hit a new two-year low. Concerns about UK’s economic outlook are growing as energy costs soar. Also the decline in equity prices in Wall Street weighs on GBP. The Dow Jones is falling by 0.80% and the Nasdaq by 1.17%. 

Since last Friday, the cross has risen 175 pips. On Monday it broke the 0.8500 resistance area and the upper limit of a consolidation range. Now it is holding above 0.8540 and testing levels above the critical 0.8600 mark. The next resistance stands at 0.8640.

Technical levels