EUR/GBP extends bounce off yearly low to 0.8550 as ECB rate hike concerns challenge BoE hawks – by anilpanchal7 EURGBP ECB BOE RiskAversion Crosses
Germany’s Producer rises by 1.0% for May versus 1.7% YoY expected and 4.1% prior whereas the monthly figures spread disappointment with -1.4% mark compared to -0.7% market forecasts and 0.3% previous readings. It’s worth noting that statistics from Germany and the Eurozone have recently flagged concerns of the economic slowdown in the old continent and challenged the Euro bulls.
Even so, European Central Bank policymaker Peter Kazimir said on Monday, “We need to raise rates again in July.” On the same line, ECB Chief Economist Philip Lane said that another rate hike in July seemed appropriate but noted that the decision in September will depend on incoming data, per Reuters. Furthermore, ECB Governing Council member Isabelle Schnabel also said, “Risks to the inflationare tilted to the upside.
On the other hand, The Times came out with the news suggesting that the UK government’s two-year borrowing costs have risen above 5% for the first time in 15 years amid mounting expectations that the Bank of England will lift interest rates again this week as it battles to contain inflation.
Elsewhere, the fears of slower economic recovery in the UK join the US-China tension to weigh on the sentiment and allow the Euro pair to remain on the front foot versus the Pound. While portraying the mood, S&P500 Futures print mild losses whereas the US 10-year and two-year Treasury bond yields grind near 3.82% and 4.75% respectively by the press time, after rising in the last two consecutive days.
Moving on, a light calendar in Eurozone and the UK may restrict immediate EUR/GBP moves ahead of Wednesday’s UK inflation data and Thursday’s Bank of England Monetary Policy Meeting.Oversold RSI conditions triggered the EUR/GBP pair’s rebound from a 13-day-old falling support line, close to 0.8510 by the press time. However, the quote’s recovery remains elusive unless it crosses the two-month-old resistance line, near 0.8580 at the latest.
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