EUR/GBP: the euro tries to rebound from a key pivot

The euro could gain ground against its British counterpart

EUR/GBP is trying to regain some momentum after tumbling last week to near two-month lows below 0.85. The single currency was penalized last week by the absence of more hawkish rhetoric from ECB members as inflation accelerated to a new high of 8.6% in June according to the preliminary estimate.

However, the euro could rally in the short term, at least against the pound, because unlike the Bank of England, the ECB could surprise at its next meeting next week by announcing, for example, a larger rate hike. than expected by 50 basis points.

Although this is not the main scenario being considered, it is increasingly plausible given that the latest inflation figure has once again surprised on the upside, hitting a record high of 8.6% and the euro fell to a 20-year low against the dollar.

On the other side of the Channel, the Bank of England is much less likely to surprise operators by accelerating its monetary tightening given that the latter is already well underway and that the British economy is showing more and more signs of stagflation.

EUR/GBP daily price chart – key levels

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