144.37 0.26%
    0.88 -0.16%
    1.09 0.55%
    1.24 0.71%
    0.68 1.51%
    132.42 -0.28%
    0.63 0.67%
    0.91 -0.26%
    1.34 -0.6%

EUR/GBP fails at 200-day average again

It looks like the long-term downtrend will continue, unless bulls push the euro above the 200-day moving average.

The euro-sterling cross ticked lower today, as the EUR/USD pair was flat, but the GBP/USD pair managed to book some gains. At the time of writing, the euro was seen at around 0.8530 against the Pound.

EU sentiment is rising

Traders paid attention to today’s ZEW surveys, which surprised positively. German economic sentiment jumped to 31.7 in November, up from 22.3 in October , while analysts had expected a decline to 19. Likewise, the eurozone’s economic sentiment survey improved to 25.9, from 21 previously. However, there was no volatile reaction to the data.

Financial market experts are more optimistic about the coming six months. For Q1 2022, experts expect growth to pick up again and inflation to fall both in Germany and the Eurozone, the survey said

From other news, the European Central Bank (ECB) top supervisor Andrea Enria said on Tuesday that low ECB interest rates are now hurting bank margins more than they are boosting lending volumes. He added that the margin effect has been prevailing, so there is a negative effect on bank margins, but this is likely to persist for a while.

Additionally, ECB President Christine Lagarde is due to deliver opening remarks at the ECB Forum on Banking Supervision. However, since the topic of her speech is not monetary policy, her comments will likely be ignored by market participants.

Investors will then switch attention to the US PPI indices. According to this measure, inflation is expected to rise further to 8.7% year on year . However, the core indicator is seen stalling at 6.8%. As a result, the USD might be volatile after the data, likely moving the GBP/USD and EUR/USD pairs, impacting the EUR/GBP cross as well.

More critical US data will be released tomorrow, including the US CPI data. Inflation will likely stay near the previous levels, way above the Fed’s 2% target.

Daily chart remains bearish

The EUR/GBP cross has been stuck below the 200-day moving average since the start of 2021 . It managed to jump to the average in September, but bears quickly defended it and sent the euro to new cycle lows.

The same pattern seems to be repeating nowadays as the euro re-tested the 200-day average at 0.8580, only to form a bearish daily pin bar, usually a reversal pattern. Two days of selling have followed, bringing the cross lower. If the price can not climb back above the 0,8580 zone in the following days, we might see another leg more down, targeting 0.8475 .

Alternatively, more significant stop losses could be hit if the euro climbs above the 200-day average, potentially sending the cross toward another strong resistance at 0.8610.

eurgbp daily chart EUR/GBP daily chart, Source: Author´s analysis,

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