- EUR/GBP gained strong positive traction on Friday and shot back to the weekly high.
- Stronger Eurozone CPI figures reaffirmed ECB rate hike bets and boosted the euro.
- Cautious BOE, Brexit woes undermined the GBP and contributed to the strong move.
The EUR/GBP cross built on the overnight goodish rebound from mid-0.8500s, or a nearly two-week low and gained strong positive traction on the last day of the week. The buying interest picked up pace during the early part of the European session and pushed spot prices to the 0.8650-0.8655 region, back closer to the weekly high.
The shared currency's relative outperformance comes amid a clear signal by the European Central Bank that it would begin the rate hike cycle in June. Furthermore, a 50 bps hike in September is seen as an almost done deal and the bets were reaffirmed by stronger Eurozone consumer inflation figures released earlier this Friday.
According to the preliminary estimate published by Eurostat, the annualized Eurozone Harmonised Index of Consumer Prices (HICP) accelerated to 8.6% in June. This was well above market expectations for a rise to 8.4% from the 8.1% reported in May, which, in turn, was seen as a key factor that provided a fresh lift to the EUR/GBP cross.
On the other hand, the British pound was pressured by expectations that the Bank of England would adopt a gradual approach toward raising interest rates amid growing recession fears. Apart from this, concerns about fresh UK-EU tensions over the Northern Ireland Protocol of the Brexit agreement should act as a headwind for sterling.
The fundamental backdrop supports prospects for a further near-term appreciating move for the EUR/GBP cross. Hence, some follow-through strength towards reclaiming the 0.8700 mark, en-route the YTD peak around the 0.8720 region, remains a distinct possibility.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD defends 0.6400 after Chinese data dump
AUD/USD has found fresh buyers near 0.6400, hanging near YTD lows after strong China's Q1 GDP data. However, the further upside appears elusive amid weak Chinese activity data and sustained US Dollar demand. Focus shifts to US data, Fedspeak.
USD/JPY stands tall near multi-decade high near 154.50
USD/JPY keeps its range near multi-decade highs of 154.45 in the Asian session on Tuesday. The hawkish Fed expectations overshadow the BoJ's uncertain rate outlook and underpin the US Dollar at the Japanese Yen's expense. The pair stands resilient to the Japanese verbal intervention.
Gold: Buyers take a breather below $2,400 amid easing geopolitical tensions
Gold price is catching a breath below $2,400 in Asian trading on Tuesday, having risen over 1% in the US last session even on a solid US Retail Sales report, which powered the US Dollar through the roof. Easing Middle East geopolitical tensions and strong Chinese data could cap Gold's upside.
SOL primed for a breakout as it completes a rounding bottom pattern
Solana price has conformed to the broader market crash, following in the steps of Bitcoin price that remains in the red below the $65,000 threshold. For SOL, however, the sensational altcoin could have a big move in store.
Israel-Iran military conflict views and takeaways
Iran's retaliatory strike on Israel is an escalation of Middle East tensions, but not necessarily a pre-cursor to broader regional conflict. Events over the past few weeks in the Middle East, more specifically this past weekend, reinforce that the global geopolitical landscape remains tense.