Economy Forex News

EUR/GBP holds above 0.8500 support area

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  • The euro seems unable to bounce from the 0.8500 support area.
  • Concerns about rising inflation are weighing on the EUR.
  • A break of 0.8500 would expose a year-to-date low at 0.8450.

EUR has rallied against sterling on Wednesday after losing nearly 1.5% in a four-day pullback from last week’s high at 0.8655. However, EUR/GBP recovery lacks follow-through and remains dangerously close to the 0.8500 support area.

EUR/GBP

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Euro suffers from concerns about the euro zone

Investor concerns about rising energy prices and their impact on the eurozone’s growth outlook have weighed on the euro, which has been declining against its main rivals. In contrast, the pound has gained ground, supported by market expectations that the Bank of England will be one of the first major central banks to raise interest rates in the wake of the COVID-19 crisis.

Macroeconomic data has not been particularly favorable for the euro either. The result was a 7.7% decline in German factory orders in August, worse than the market’s expectation of a milder 2.1% drop, and a 0.3% decline in eurozone retail consumption, a far cry from the market’s expectation of 0.8% growth.

EUR/GBP: Testing important support at 0.8500

The pair is now just a handful of pips above 0.8500 (lows of September 16, October 5). Below here, the 19-month low at 0.8550 could be exposed and cause a double top formation with a target well below 0.8300.

To relieve downside pressure and attempt a retest of 0.8610 (Sep 8 and 23), the pair should regain the 50-day and 100-day simple moving averages (SMA) above 0.8560 (highs of May 25, July 20 and Sep 29).

Technical levels

OVERVIEW
Today’s Last Price 0.8504
Daily Rate -0.0005
Daily Rate % -0.06
Today’s Daily Open 0.8509

TRENDS
20 Daily SMA 0.8562
50 Daily SMA 0.8548
100 Daily SMA 0.8566
200 Daily SMA 0.8641

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Michelle D. Madsen

Michelle D. Madsen graduated from the University of Westminster and has been deeply involved in the world of finance ever since. She has worked as a Broadcast Journalist hosting various news shows and informative webcasts about the financial markets. Since 2004 she has also been writing for Metanews daily, her attention to detail, and her in-depth knowledge of the financial markets have led her to cover Foreign Exchange and commodities. The world of finance has changed in the last few years with the introduction and rising popularity of cryptocurrencies. She has in no means been left behind, adding this to her bank of intellect and is now also an expert in cryptocurrencies. For the last ten years, Ms. Madsen has been engaged in the financial market. She has notedly written a great number of incredibly informative reviews for the crypto exchange and forex brokers. Her wealth of knowledge has enabled her to become a leading expert in the field. She continues to inform the public writing up-to-date, thorough reviews for the readers of Metanews as she has for the last decade.
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