EUR/GBP breaks above 0.8650 to highest level in a year

• Technical factors and a weaker pound boost EUR/GBP to highest since May 2021.
• Cross breaks multi-day range and soars.
• UK data below expectations, BoE decision on Thursday.

The EUR/GBP broke a multi-day range and jumped to 0.8681, reaching the highest level since May 2021. The cross is rising almost a hundred pips on Tuesday, rising for the third consecutive day. The euro is also rising versus the Swiss franc on Tuesday. EUR/CHF climbed above 1.0420 reaching the highest level since June 9.

The break of the critical resistance area of 0.8600 and also above 0.8650, boosted the euro further to the upside. The next level to watch now is 0.8700. The bullish tone in EUR/GBP will remain in place while above 0.8600.

Economic data from the UK came in below expectations with the unemployment rate rising unexpectedly to 3.8%. The figures contributed weakening the pound ahead of the Bank of England (BoE) on Thursday.

The central bank is expected to raise the key rate by 25 basis points to 1.25%. “There won’t be updated macro forecasts until the next meeting on August 4.  WIRP suggests around 35% odds of a 50 bp move, down from over 50% at the start of this week.  However, odds of 50 bp moves at the August 4 and November 3 meetings have risen,” explained analysts at Brown Brothers Harriman. The pound remains under pressure despite tightening expectations.

Technical levels