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Market News EUR/GBP looks a breach above 0.8630 despite the fact that Eurozone interest rates are expected to peak sooner

EUR/GBP looks a breach above 0.8630 despite the fact that Eurozone interest rates are expected to peak sooner

EUR/GBP is attempting to produce additional gains above 0.8630 as the emphasis switches to ECB Lagarde’s address. ECB policymakers envisage interest rates peaking in the near term. The food supply issue in the United Kingdom has a significant impact on the British pound.

Daniel Rogers
2022-12-07
364

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During the Asian session, the EUR/GBP pair has seen a stronger rebound from 0.8580 and has reached close to the crucial 0.8630 level. Despite the European Central Bank (ECB) being on the verge of achieving an interest rate high, Euro bulls have experienced substantial demand. Consequently, the monetary policy meeting set for next week will be of critical importance.

 

The cross is striving for the fourth time this week to break decisively above the important resistance of 0.8630. ECB policymakers' hawkish comments are restraining the Euro bulls.

 

Governor of the Central Bank of Cyprus Constantinos Herodotou stated, "There will be another rate hike, but we are very close to neutral." Phillip Lane, chief economist of the European Central Bank, has doubts about whether the inflation peak has already occurred or will occur next year. He noted that he anticipates more rate hikes, but "much has already been done."

 

In the meantime, investors anticipate Christine Lagarde's speech, which will be announced on Thursday. In light of the dismal Retail Sales figures, the ECB President is likely to reduce her inflation forecast in her upcoming statement.

 

This week's Retail Sales statistics for the Eurozone decreased by 1.8% compared to projections of a 1.7% decline. In addition, yearly economic data contraction was 2.7%, compared to the consensus estimate of 2.6%. A drop in household demand shows that the European Central Bank's (ECB) policy tightening measures are doing their job successfully. This could compel businesses to seek price reductions for goods and services in order to meet their sales goals.

 

The Pound Sterling has been affected by the escalating food supply issue in the United Kingdom, which has been caused by rising costs and labor shortages. President of the National Farmers Union Minette Batters stated, "The government and the entire supply chain must act immediately." As reported by the Financial Times, "tomorrow might be too late." The economy is already experiencing rising food inflation, and the food supply problem will only exacerbate the situation.

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