The EUR/GBP
pair hit a fresh session low of 0.7070 as the British Pound remained relatively
resilient to the broad based USD rally.
Monetary policy
divergence at play
The increasing expectation of a Fed rate hike
in December is weighing heavily over the EUR since the EC Bhs hinted at more
easing in December. Meanwhile, the Sterling stays relatively resilient as the
BOE is expected to follow the Fed and raise rates.
Moreover, the markets
now believe the Fed has made up its mind and thus even a slightly better than
expected US data is leading to broad based USD rally and a serious EUR weakness.
The EUR/GBP cross is now approaching 0.7063 (76.4% of Jul-Oct rally).
EUR/GBP Technical Levels
The immediate support
is seen at 0.7063 (76.4% of Jul-Oct rally), under which the pair could extend
the losses to 0.7026 (Aug 18 low). On the other side, resistance is seen at 0.71
and 0.7145 (61.8% of July to Oct rally).
