The EUR/GBP price drifted upwards after the hawkish statements by Andrew Bailey and Christine Lagarde. The closely-watched EUR to GBP exchange rate rose to a high of 0.8645, which was the highest pount since June 15th of this year. The focus will be on the upcoming statements by central bank officials and economic data from the European Union.
Hawkish Christine Lagarde
The EURGBP price rose as an ECB meeting got underway in Portugal. In a statement, Lagarde turned extremely hawkish, saying that the bank will start hiking interest rates in July of this year. Analysts believe that the ECB will hike by 0.25%.
But in the statement, she said that the committee will be data-dependent and that they could be more aggressive. As such, investors are not ruling out a 0.50% rate hike. If the latter happens, it will be the biggest rate increase by the ECB.
Still, while the Fed and SNB have delivered big rate hikes, the ECB is at a difficult place because of the uneven state of the bloc’s economies. Some, like Netherlands, Germany, and France are doing well. Other large economies like Spain and Italy have a huge debt burden.
The EUR/GBP price will react to the upcoming consumer and business confidence data by the European Commission. Economists expect these numbers to reveal that confidence crashed hard in June as the cost of energy soared. There are risks that energy prices will keep rising in the coming months as Russia lowers supplies.
The next key catalysts for the EUR to GBP exchange rate will be statements by Andrew Bailey and Christine Lagarde. Spain will publish the latest inflation data as well.
The 4H chart shows that the EUR/GBP price drifted upwards this week. As it rose, it moved above the important support level at 0.8590, which is an important level as the red arrows show. It remains above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has kept rising, The pair is between the small ascending channel.
Therefore, the EUR to GBP exchange rate will likely resume the downward trend as sellers target the key support level at 0.8590. A move above the resistance at 0.8645 will invalidate the bearish view.