- EUR/GBP attracts fresh buyers near the 0.8630 support zone or a nearly two-week low.
- Some repositioning trade ahead of President Christine Lagarde’s speech lends support.
- The mixed fundamental backdrop warrants caution before positioning for further gains.
The EUR/GBP cross once again finds some support near the 0.8630 area and stages a modest intraday recovery from a near two-week low touched this Tuesday. Spot prices extend the steady ascent through the early part of the European session and climb to a fresh daily high, around mid-0.8600s in the last hour.
The shared currency’s relative outperformance against its British counterpart could be attributed to some repositioning trade ahead of the European Central Bank (ECB) President Christine Lagarde’s speech later today. Apart from this, the intraday move up in the EUR/GBP cross lacks any obvious fundamental catalyst and is likely to remain capped in the wake of speculations that additional ECB rate hikes may be off the table for now.
Several ECB officials have indicated that the era of monetary tightening may be coming to an end. In fact, Francois Villeroy de Galhau, the Bank of France President, said this Tuesday that a further rate hike is not the right thing to do at this stage. This, in turn, might hold back traders from placing aggressive bullish bets around the EUR/GBP cross and warrants some caution before positioning for any further near-term appreciating move.
The downside, meanwhile, seems cushioned on the back of firming expectations that the Bank of England (BoE) will maintain the status quo in November. The UK central bank surprisingly paused its rate-hiking cycle in September and provided little hints of its intention to raise rates. This, in turn, should act as a tailwind for the EUR/GBP cross, suggesting that any meaningful slide might still be seen as a buying opportunity and remain limited.
There isn’t any relevant market-moving economic data due for release on Tuesday, either from the Eurozone or the UK. Hence, traders will closely scrutinize Lagarde’s comments for cues about the future policy move, which should influence the Euro and produce short-term opportunities around the EUR/GBP cross.
Technical levels to watch
Source: https://www.fxstreet.com/news/eur-gbp-rebounds-from-near-two-week-low-jumps-to-mid-08600s-ahead-of-ecbs-lagarde-202310100825