- The euro, unable to break above 0.8800, consolidates gains at 0.8785.
- BOE pledge to support UK economy doesn’t help pound
- The pair fails to take advantage of sterling’s weakness.
The euro has failed to break through the 0.8800/20 resistance zone in its third attempt in recent days. However, the pair maintains a slightly positive tone and remains stable in the upper range of 0.8700.
BOE’s promise to support the economy doesn’t help the pound
The new set of measures to support the economy announced by the Bank of England in the early hours of Monday have not served to support the pound sterling. Cable continues to be offered across the board, and has hit new two-week lows against the dollar.
Sterling has lagged for the past few weeks after UK Prime Minister Liz Truss disrupted markets with a plan to cut taxes and increase government spending, sending the currency plummeting. .
At the other extreme, the euro, with its own challenges, has been unable to take advantage of the pound’s weakness. The common currency is in a steady downward trend against the US dollar, crushed by investor concerns about the economic fallout from the escalating war in Ukraine and high energy prices.
EUR/GBP is capped below the 0.8810/20 resistance zone
From a technical point of view, the euro is going through a positive trend in the short term, which should exceed 0.8820 (high of 6.7 Oct) to gain momentum and attack 0.8850 (high of 30 Sep, low of September 26 and 28), which would open the way towards the 0.9000 area.
To the downside, immediate support is found at 0.8740 (low Oct 7) and then probably 0.8690 (low Sep 22). Below here is an important level at 0.8625 (15 Sep low), which could trigger a head and shoulders figure, which could push the pair towards the 0.8400 area.
Technical levels to watch
Source: Fx Street
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