The EURGBP, representing the exchange rate between the Euro and the British Pound, is a key measure of economic interplay between the Eurozone and the United Kingdom. The Euro’s value is primarily influenced by the financial policies and performance of the Eurozone member states, particularly significant economies such as Germany and France. On the other hand, the British Pound is swayed by UK-specific factors, including economic data releases, political events, and decisions made by the Bank of England. Fluctuations in this currency pair often indicate shifting economic landscapes or differing monetary policies between these two major economies.
UK Consumer Price Index (CPI) YoY, July 17, 8:00 (GMT+2)
The UK CPI is forecasted to decrease slightly to 1.9% from the previous 2.0%. If the CPI data meets or exceeds this forecast, indicating stable or increased inflationary pressures, it could strengthen the Pound by suggesting economic resilience. This may prompt the Bank of England to consider tightening monetary policy sooner, potentially decreasing the EURGBP pair as the Pound gains strength. Conversely, if the CPI data falls below the forecast, indicating weaker inflation, it could weaken the Pound as it may signal an economic slowdown, potentially leading to a rise in the EURGBP pair as confidence in the Pound diminishes.
Eurozone Interest Rate Decision, July 18, 14:15 (GMT+2)
The interest rate in the Eurozone is expected to hold steady at 4.25%. If this forecast proves accurate and the ECB is satisfied with the current economic balance, the value of the Euro could remain stable, resulting in minimal immediate impact on the EURGBP pair. However, if the ECB surprises with a rate increase, indicating a more substantial commitment to combating inflation, the Euro would likely appreciate against the Pound, causing the EURGBP pair to increase as well. On the other hand, a reduction in the interest rate, or any dovish signals for future monetary policy, could devalue the Euro, leading to a decrease in the EURGBP rate as investor confidence shifts.
The EURGBP formed a descending channel pattern in a long-term downward movement in the Daily timeframe. The price fell to the lower trend line, testing the 161.8 Fibonacci support area. The moving averages indicate the continuation of the downtrend, but the %R indicates a significant oversold trend.
- If the price breaks the trend line and falls below 0.8410, the target will be 0.8300 level, corresponding to 238.2 Fibonacci;
- Otherwise, a rebound from the trend line will allow EURGBP to rise to 0.8500;
