- The euro falls throughout the market on Tuesday due to a combination of factors.
- EUR/GBP falls to 0.8542, the lowest since June 17.
- GBP/USD fall below 1.2000, favors rebound of the cross.
The EUR/GBP fell from 0.8610 to 0.8542, the lowest level in two weeks, as the euro retreated across the board. The common currency is under pressure in a context of risk aversion and doubts about the policies of the European Central Bank.
The euro it is at a 20-year low against the dollar and a seven-year low against the Swiss franc. The declines were intensified by a new rise in the price of gas in the region, which contributes to the deterioration in the economic outlook for the Eurozone. This calls into question the ECB’s monetary tightening trajectory and the success of the “anti-defragmentation” instrument that will be presented at the next central bank meeting. This tool will be used to avoid a sharp rise in the yields of sovereign bonds, especially that of the most vulnerable countries.
EUR/GBP recently trimmed losses and is at 0.8580. In the last few hours GBP/USD plummeted further, reaching levels below 1.2000, which hurt the pound. In any case, the outlook in the UK is not necessarily better than that of the Eurozone.
Technically the EUR/GBP shows more signs of weakness. Failure to hold above 0.8600, a key level, points to difficulties in extending rallies. In addition, Tuesday’s drop is currently putting the price below a short-term uptrend line. A return above 0.8615 could maintain expectations of further euro gains in the short to medium term, while a consolidation below would suggest further downside.
Technical levels
Source: Fx Street
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