EUR/GBP Price Consolidating at 0.8500 Despite Upbeat German Data
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- The EUR/GBP experienced some selling for the second day in a row on Tuesday.
- An imminent rate hike by the BoE acted as a tailwind for sterling.
- US dollar weakness benefitted the euro and limited its downside.
The EUR/GBP cross price remained low before the European session, with the bears anticipating a continuous decline below the key psychological level of 0.8500.
On Tuesday, the cross rate fell for the second consecutive day. It may now continue its retreat from the psychological level of 0.8500. The relative superiority of the British pound in the absence of negative Brexit headlines can be attributed to an upcoming rate hike by the Bank of England in December.
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Although the US dollar was moderately weakened, the common currency still enjoyed some support. Additionally, the Northern Ireland Protocol stalemate has discouraged sterling bulls from aggressive interest rates, as well as limiting more serious losses for the EUR/GBP cross, at least for now. Thus, further depreciation requires a certain degree of caution.
Economically speaking, German industrial production rose 2.8% in October despite a small boost against the EUR/GBP cross. In addition, we recommend waiting for some subsequent selling below the horizontal resistance of 0.8490-85 to confirm that the recent rebound from the YTD lows is over.
In addition to the economic report, the ZEW Economic Sentiment Index was published on Tuesday. Furthermore, the final printed version of Eurozone GDP for the third quarter of 2021 will also affect the single currency. Finally, the new developments in Brexit will guide traders to take advantage of some short-term opportunities in the EUR/GBP cross in the coming weeks.
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EUR/GBP price technical analysis: Rangebound around 0.8500
The EUR/GBP price is wobbling around 0.8500, just below the 20-period SMA on the 4-hour chart. The volume slowly diminishes, indicating that the market is preparing for a breakout in either direction. The price remains supported by the 50-period SMA and the horizontal level around 0.8490.
