EUR/GBP gains strength near 0.8330 following weak UK retail sales data
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The eur/gbp pair extended its recovery on friday, trading around 0.8330, gaining 0.17% during early european hours. the move comes after the uk retail sales report showed a sharper-than-expected decline, raising concerns about the uk’s economic outlook.
Uk retail sales data: The ons reported a 0.7% month-on-month decline in retail sales for october, well below the market expectation of -0.3%. september's figure was also revised down to a 0.1% increase from the initial 0.3% estimate. core retail sales (excluding auto fuel) fell 0.9%, compared to expectations of a 0.4% decline, amplifying the pressure on the pound sterling.
Market reaction: The disappointing data reinforced concerns about weak consumer spending, a key driver of the uk economy, leading to a sell-off in the pound sterling and providing support for the euro in the cross.
Euro's gains capped by expectations of ecb rate cuts
While the euro has gained strength against the pound, its upside is limited by increasing market speculation of european central bank (ecb) rate cuts.
Ecb rate outlook: policymakers such as yannis stournaras and fabio panetta have indicated the likelihood of a 25-basis-point rate cut in december, with further reductions expected in 2025. panetta emphasized the need for a faster rate-cutting cycle to boost the eurozone economy, while also calling for the ecb to move away from its "meeting-by-meeting" guidance. this dovish stance weighs on the euro and tempers its rally against the pound.
Market focus ahead traders will closely watch several key events for further direction in the eur/gbp pair:
Uk flash pmi data:due later on friday, these figures will offer insights into the health of the uk's private sector and could either amplify or counter the bearish sentiment surrounding the pound.
Eurozone hcop pmi and ecb president lagarde’s speech:the euro’s trajectory will depend on whether the data and lagarde's remarks reinforce or temper expectations of aggressive rate cuts.
technical outlook: eur/gbp
Resistance: the immediate upside target for the eur/gbp pair is near 0.8350, with further gains possibly testing the 0.8380 level if sentiment remains favorable for the euro.
Support:on the downside, initial support lies at 0.8300, with a break below this level exposing the 0.8275 zone. sustained weakness below this could challenge the 0.8250 mark.
Outlook The short-term bias for eur/gbp remains positive, driven by weak uk data and reduced optimism for the pound. however, the euro’s gains could be moderated by the prospect of aggressive ecb easing, making upcoming data and central bank commentary critical for further direction.
Uk retail sales data: The ons reported a 0.7% month-on-month decline in retail sales for october, well below the market expectation of -0.3%. september's figure was also revised down to a 0.1% increase from the initial 0.3% estimate. core retail sales (excluding auto fuel) fell 0.9%, compared to expectations of a 0.4% decline, amplifying the pressure on the pound sterling.
Market reaction: The disappointing data reinforced concerns about weak consumer spending, a key driver of the uk economy, leading to a sell-off in the pound sterling and providing support for the euro in the cross.
Euro's gains capped by expectations of ecb rate cuts
While the euro has gained strength against the pound, its upside is limited by increasing market speculation of european central bank (ecb) rate cuts.
Ecb rate outlook: policymakers such as yannis stournaras and fabio panetta have indicated the likelihood of a 25-basis-point rate cut in december, with further reductions expected in 2025. panetta emphasized the need for a faster rate-cutting cycle to boost the eurozone economy, while also calling for the ecb to move away from its "meeting-by-meeting" guidance. this dovish stance weighs on the euro and tempers its rally against the pound.
Market focus ahead traders will closely watch several key events for further direction in the eur/gbp pair:
Uk flash pmi data:due later on friday, these figures will offer insights into the health of the uk's private sector and could either amplify or counter the bearish sentiment surrounding the pound.
Eurozone hcop pmi and ecb president lagarde’s speech:the euro’s trajectory will depend on whether the data and lagarde's remarks reinforce or temper expectations of aggressive rate cuts.
technical outlook: eur/gbp
Resistance: the immediate upside target for the eur/gbp pair is near 0.8350, with further gains possibly testing the 0.8380 level if sentiment remains favorable for the euro.
Support:on the downside, initial support lies at 0.8300, with a break below this level exposing the 0.8275 zone. sustained weakness below this could challenge the 0.8250 mark.
Outlook The short-term bias for eur/gbp remains positive, driven by weak uk data and reduced optimism for the pound. however, the euro’s gains could be moderated by the prospect of aggressive ecb easing, making upcoming data and central bank commentary critical for further direction.