EUR/GBP is currently trading marginally lower on the session slightly to the south of the 0.8500 level, though support in the form of last week’s low at 0.8490 and the 50-day moving average at 0.8485 is keeping a floor under the price action for now. Risk appetite has been improving since the start of the week which generally favours the comparatively risk-sensitive GBP versus the euro. This has helped the pair reverse back under 0.8500 from this week’s opening levels near 0.8550. German Industrial Production saw a much bigger than expected 2.8% bounce in October, though analysts warned that supply chain disruptions would continue to hamper the recovery in output in the months ahead. Finally, the final estimates of Eurozone GDP growth and employment change in Q3 were left unchanged at 2.2% and 0.9% QoQ respectively.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

Seeing EUR/GBP stall at resistance in the 0.8500 area is not to surprising given the current environment of uncertainty regarding ECB and BoE policy in the coming months. With regards to the Bank of England, the more cautious tone from policymakers on the risks posed by the Omicron outbreak has resulted in money markets pricing out a rate hike later this month.

The selling pressure isn't too surprising from a technical standpoint given the proximity of the pair’s 200-day moving average at 0.8506. The 200DMA has been a key level of resistance over the last few months. To the downside, the 0.8500 level is for now offering support but, below that, the key support that traders will be keeping an eye on is the 50DMA at 0.8487.

EURGBP Swinging Its Way to 0.8600

Dec 08 2021

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