EUR/GBP clings to 0.8500 amid energy crisis in Europe and the UK
- EUR/GBP failure at 0.8550 could pave the way towards 0.8400.
- Uk’s petrol crisis seems resolved, according to the government.
- UK Services PMI reading was better than expected.
The EUR/GBP is sliding for the fourth day in a row, is down 0.37%, trading at 0.8508 during the day at the time of writing. The cross-currency jumped off weekly lows around 0.8503 but since then is trapped within the 0.8503-0.8515 narrow range.
Market mood is in risk-on mode, as witnessed by US stock market indices rising between 0.58% and 1.78%. Meanwhile, the US Dollar Index, which tracks the greenback’s performance against a basket of six rivals, is barely up 0.01%, sitting at 93.90, weighs on the single currency.
The energy crisis across the UK and Europe keeps politicians worried. In the UK, the government announced that Petrol stations would resume their operations as armed forces began the delivery of petrol across the UK. This news boosted the British pound against the single currency.
Moving to the macroeconomic front, the UK Services PMI for September rose to 55.4, better than 54.6 estimated by analysts, whereas the Composite PMI was revised to 54.9 from 54.1 in the preliminary reading.
EUR/GBP Price Forecast: Technical outlook
The EUR/GBP is trading above the daily moving averages (DMA’s), supporting the downward bias. During the day, the pair reached the 50-day moving average at 0.8543 but retreated the move.
For the sellers, a daily break below 0.8500 could open the door for further downward pressure on EUR/GBP. The first demand zone would be the August low at 0.8483, followed by the August 10 low at 0.8450. A breach of the latter would expose 2020’s low at 0.8281.
The Relative Strength Index (RSI) is at 41, aiming lower, supporting the bearish bias.
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