0.8336: Euro hits 19-month lows against British Pound despite upbeat Eurozone GDP
The Euro (EUR) extends losses on Friday as Eurozone macroeconomic data has failed to convince investors, while the British Pound (GBP) rallies across the board with markets pricing in a Bank of England (BoE) rate hike next week.
The Euro has hit a 19-month low against the British Pound, despite positive Eurozone economic growth news. Eurozone GDP grew 0.4% in the third quarter, falling short of both prior quarter's 0.6% growth and market expectations of 0.2%. The Euro/British Pound (EUR/GBP) pair fell to 0.8336, on track for a 3.15% decline in a five-week downtrend.
Investors' optimism about robust Eurozone growth was dampened by a higher-than-expected unemployment rate of 6.5% in September, compared to the 6.4% anticipated. Oil prices, near five-month highs with Brent Crude above $112.00, weigh on regional growth and heighten inflation risks. In the UK, the Bank of England prepares to meet next week, with markets pricing in a 25-basis-points rate hike.
The EUR/GBP pair stands at 0.8343, continuing its downward trend in a bearish channel. Momentum indicators support a bearish outlook on the 4-hour chart, while the Relative Strength Index (14) leans toward oversold territory, suggesting bears may need to pause. A drop below Thursday's low of 0.8345 could expose lows between 0.8315 and 0.8330 before the channel bottom near 0.8300. Should the pair rise above 0.8360 by Wednesday's close, it may test the weekly high near 0.8400.
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