ECB rate hike gives Euro little to work with as Pound holds firm
EUR/GBP is easing on Friday and slipping toward the 0.8580 area. The cross had pushed to the top of its recent range in the high 0.8590s before running out of steam.
The Euro (EUR) faced challenges on Friday as it slipped toward the 0.8580 level, having previously peaked in the high 0.8590s. This decline occurred after the European Central Bank (ECB) increased interest rates by 25 basis points, with the refinancing rate, marginal lending facility, and deposit facility now at 2.65%, 2.90%, and 2.50%, respectively.
ECB President Christine Lagarde did not confirm the future direction, emphasizing the bank's reliance on data-driven decisions. She also pointed out that inflation expectations were still high, especially due to the ongoing Middle East conflict. Meanwhile, UK economic indicators were positive, with GDP, industrial production, and manufacturing production all exceeding forecasts.
UK inflation expectations have risen, potentially leading the Bank of England (BoE) to maintain a restrictive stance. On the EUR/GBP chart, the rate traded around 0.8582, close to the 100-period Simple Moving Average (SMA) at 0.8576 but faced resistance near 0.8587. The 20-period SMA, along with support levels at 0.8584, 0.8585, and 0.8587, formed a bearish ceiling.
The Relative Strength Index (RSI) around 43 suggested fading upside attempts due to overhead supply. If EUR/GBP breaks below the recent floor around 0.8578, a deeper correction could occur, but a move above 0.8587 might alleviate current pressure.
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