Economic calendar for the European trading session today is very light. A key macro release was UK CPI reading for October that was released at 7:00 am GMT. Data showed a massive acceleration in headline price growth, from 10.1 to 11.1% YoY (exp. 10.7% YoY). This means that UK CPI inflation reached the highest level in 41 years! Acceleration was driven mostly by soaring energy prices. Core gauge, that excludes energy and food prices, remained unchanged at 6.5% YoY (exp. 6.4% YoY). Such a reading suggests that the Bank of England should continue to tighten its monetary policy. However, BoE also said that the UK economy is already in recession and more rate hikes could only make it worse. GBP dropped following the data release but has later regained ground against the US dollar. UK currency continues to underperform EUR. Common currency is gaining today as risk-off moods related to yesterday's news of a rocket strike against Poland are fading. Moreover, ECB's De Guindos said that the European Central Bank remains committed to normalizing its policy further and said that ECB will launch passive QT soon.
Taking a look at EURGBP at the H4 interval, we can see that the pair tested the support zone in the 0.8720 area yesterday. Zone marked with 23.6% retracement of the downward move launched in late-September as well as 200-period moving average was defended and a recovery move was launched. EURGBP briefly traded above the 50-period moving average (green line) earlier today but has since erased part of the gains and pulled back below it. A near-term resistance zone to watch can be found in the 0.8820 area and is marked with 38.2% retracement and previous price reactions.
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