EUR/GBP hits six-day lows under 0.8850 as pound strengthens

• Pound recovers further ground across the G10 space. 
• EUR/GBP having the worst day in months. 

The EUR/GBP dropped further during the American session and hit the lowest level in almost a week at 0.8836. It is hovering around 0.8850, down almost 90 pips, having the worst performance in months as the pound extends its recovery. 

The surprise announcement of the Bank of England on Wednesday helped gilts and also the pound that is rising across the board on Thursday. UK PM Liz Truss defended her economic plan today amid mounting criticism. Recent events created instability on Truss’s administration. 

Data released on Thursday showed the Consumer Price Index in Germany reached 10% in September, the first time 70 years to hit double digits. “The main drivers remain energy and food prices, but prices are also rising faster and faster in most other goods groups. There is no easing in sight, and next year the inflation rate is only likely to fall because energy prices are unlikely to rise again as strongly as this year, partly due to government intervention. However, the underlying price pressure is likely to remain strong”, point out Commerzbank analysts. 

The inflation numbers have no impact on the euro. Markets continue to expect the ECB and the BoE to keep rising interest rates. Afterwards EUR/GBP dropped further as GBP/SUD rose back above 1.1000. EUR/USD also printed fresh highs but rose a slower pace. 

Technical levels