Share:
EUR/GBP edges lower on Tuesday, albeit manages to hold above the 0.8600 mark.
Expectations for additional ECB rate hikes underpin the Euro and offer support.
The fundamental backdrop warrants some caution for aggressive bullish traders.
The EUR/GBP cross attracts some intraday sellers near the 0.8625 region, albeit lacks any follow-through and manages to hold above the 0.8600 mark through the mid-European session.
The shared currency continues to draw support from rising bets for additional interest rate hikes by the European Central Bank (ECB), which, in turn, is seen as a key factor acting as a tailwind for the EUR/GBP cross. Against the backdrop of the recent hawkish comments by several ECB officials, President Christine Lagarde indicated on Monday that additional interest rate rises were likely as there is no clear evidence that underlying inflation has peaked.
This, in turn, reaffirms expectations that the central bank is not done raising rates despite a fall in inflationary pressures. It is worth recalling that the headline Eurozone CPI decelerated more than anticipated to the 6.1% YoY rate in May from 7.0% previous. Moreover, Core CPI slowed from 5.6% YoY to 5.3% last month. That said, resurgent US Dollar (USD) demand is weighing on the Euro and exerting some pressure on the EUR/GBP cross.
Furthermore, speculations that the Bank of England (BoE) will be far more aggressive in policy tightening to contain stubbornly high inflation further contributes to capping the upside for the EUR/GBP cross. This, in turn, makes it prudent to wait for strong follow-through buying before confirming that spot prices have formed a near-term bottom and positioning for any meaningful recovery from a fresh YTD low, around the 0.8565 region touched last week.
Share:
Feed news
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
