Euro slides against the Pound as a UK jobs test looms
EUR/GBP slides on Monday, trading around 0.8560 as the Euro (EUR) side of the cross is underpinned by a European Central Bank (ECB) that remains hawkish. The pair hit a two-week low of 0.8554 earlier in the day before the Pound (GBP) gained some ground.
The Euro (EUR) against the British Pound (GBP) experienced a decline on Monday, with the pair trading around 0.8560. The Euro's strength was supported by the European Central Bank (ECB), which maintained a hawkish stance. ECB President Christine Lagarde addressed the European dependence on artificial intelligence, but her remarks did not provide any monetary policy signals.
Over the weekend, she expressed concerns about the prolonged energy shock and the Euro area's inflation rate of 3.3%, significantly higher than the 2% target. On Monday, Lagarde shifted focus to a longer-term issue, warning that Europe could be cut off from artificial intelligence. The immediate trigger for the EUR/GBP pair is the United Kingdom's (UK) labor market report due on Tuesday, which is anticipated to show softened figures.
Average earnings, including bonuses, are projected to decrease to 3.9% from 4.1%, while the ILO Unemployment Rate is expected to rise to 5% from 4.9%. The Claimant Count Change is forecasted to show an increase after a previous drop. Additionally, Germany's ZEW economic sentiment survey is scheduled for the same day, serving as a crucial test for the Euro.
On the 4-hour chart, EUR/GBP is currently at 0.8560, exhibiting a bearish near-term trend as it remains below both the 20-period Simple Moving Average (SMA) at 0.8580 and the 100-period SMA at 0.8575. The pair is also bounded by nearby horizontal resistance levels at 0.8562 and 0.8565, while the Relative Strength Index (RSI) approaches the 30 area around 30.15, indicating fading momentum that could facilitate further downside before any significant recovery.
Immediate support levels are identified at 0.8556 and 0.8555, forming a narrow floor that buyers may attempt to defend. On the upside, the first recovery hurdle is at 0.8562, followed by 0.8565, before encountering the 100-period SMA at 0.8575 and the 20-period SMA at 0.8580. Only a sustained break above this cluster of resistance would alleviate the prevailing bearish pressure.
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