EUR/GBP hits highest level in a year

The EUR/GBP pair has broken multi-day range and jumped to 0.8681, hitting the highest level since May 2021; rising almost a hundred pips on Tuesday, and surging for the third day in a row.

The Euro is also rising versus the Swiss franc on Tuesday. EUR/CHF climbed above 1.0420 reaching the highest level since June 9. SOME Technical factors and a weaker pound boost EUR/GBP to highest since May 2021.

The break of the critical resistance area of 0.8600 and also above 0.8650, has 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.

UK economic data came below expectations with the unemployment rate rising unexpectedly to 3.8%. The figures contributed weakening the pound ahead of the Bank of England on Thursday.

The British central bank is expected to raise the key rate by 25 basis points to 1.25%. There will not be updated macro forecasts until the next meeting on August 4.

Some observers suggest 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. The pound remains under pressure despite tightening expectations.