- EUR / GBP rises against the weaker British pound across the board.
- EUR / GBP: As long as the EUR / GBP pair remains below 0.8530, the cross has a downward bias.
The EUR/GBP It recovers the 0.8500 level, rising to new two-week highs up 0.12% during the American session, trading at 0.8506 at the time of writing. Market sentiment remains subdued as three central banks will review their current monetary policy conditions. That, in part, spurred a sell-off of risk-sensitive currencies such as the British pound, which at press time, the GBP / USD pair threatens to break below 1.3600.
Last Thursday, the European Central Bank (ECB) revised its monetary policy stance. The ECB decided to keep rates unchanged. Furthermore, despite high inflation readings, with the euro zone CPI expanding by 4.1%, it maintained its dovish stance, pushing back investors’ intentions for a rate hike until the end of 2023.
Meanwhile, the Bank of England (BoE) heads to its monetary policy meeting this week, where investors already set a rate hike of 15 basis points on November 4. A rate hike in the UK would be the first since the pandemic. In addition, it responds to rising inflation readings, as expressed by BoE members Michael Saunders and Governor Andrew Bailey.
On the macroeconomic front, the Eurozone PMIs for October were released. The German Markit Manufacturing PMI stood at 57.8 below the 58.2 estimate. In addition, the Markit euro zone manufacturing PMI rose to 58.3, worse than the 58.5 forecast by analysts.
Despite being lower-than-expected readings, production remained strong but was hit by supply chain bottlenecks and logistics issues. Along with those mentioned above, the shortage of truckers continued to hurt the manufacturing sector.
EUR / GBP Price Forecast: Technical Outlook
Daily chart
The crossing EUR/GBP has a downward bias, as shown by the directionless daily moving averages (DMA) located above the spot price. At press time, the pair is nearing the confluence of the 50 and 100 DMA around the 0.8520-40 area, which would be opposed to stiff resistance for EUR buyers. However, the Relative Strength Index (RSI) at 54 is pointing higher, a bullish signal that diverges with price action.
To extend the downtrend, sellers of EUR / GBP will need to hold the price below the September 16 low of 0.8500. On that result, EUR sellers could push the pair towards a retest of 0.8402, which is the 2021 low.
For EUR / GBP buyers to confirm their bullish bias, they will need a daily close above 0.8530. In that result, the next resistance would be the 50 DMA at 0.8588.
Technical levels
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