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EUR/GBP: Bearish Bias as UK Growth Outpaces Eurozone RecoveryAs of January 2, 2025, 12:52 PM, I maintain a bearish short-term bias for EUR/GBP. This outlook is based on a detailed analysis of fundamental, macroeconomic, and political factors driving divergence between the Eurozone and UK economies. Here’s why I believe EUR/GBP has more room to fall: Fundamental Analysis 1. Monetary Policy Divergence: • ECB (European Central Bank): • On December 14, 2024, the ECB cut interest rates by 25 basis points, reducing the deposit rate to 3.0%. This dovish stance reflects concerns about weak demand and sluggish growth, particularly in Germany and France. • Source: ECB Press Release, December 14, 2024. • BoE (Bank of England): • The BoE held its rate at 5.25% during its meeting on December 20, 2024, citing persistent inflationary pressures and a need for restrictive policy. This hawkish stance supports GBP strength. • Source: Bank of England Summary, December 20, 2024. 2. Economic Growth: • Eurozone: • Germany entered a technical recession in Q4 2024, while France and Italy reported weak industrial output. The Eurozone’s 2024 GDP growth is estimated at 0.7%, well below expectations. • Source: Reuters, December 30, 2024. • United Kingdom: • The UK economy grew by 1.1% in 2024, with strong consumer spending and resilient labor market data (unemployment at 3.9%) boosting investor confidence in GBP. • Source: Office for National Statistics, December 29, 2024. 3. Inflation Trends: • Eurozone: • Inflation fell to 2.1% in December 2024, nearing the ECB’s target and supporting its dovish policy stance. • Source: ECB Inflation Report, December 2024. • United Kingdom: • Inflation remains higher at 4.2%, keeping pressure on the BoE to maintain its restrictive policy stance. • Source: Bank of England Summary, December 2024. 4. Political Dynamics: • Eurozone: • Ongoing political instability in France (strikes) and Italy (debt concerns) further dampens confidence in the euro. • Source: Reuters, December 28, 2024. • United Kingdom: • Relative political stability and improved post-Brexit trade relations with the EU have bolstered GBP sentiment. • Source: The Times, December 29, 2024. 5. Risk Sentiment: • The euro remains under pressure from safe-haven flows into USD and CHF, while the GBP benefits from improved investor confidence driven by a stronger macroeconomic outlook. Conclusion The bearish case for EUR/GBP is supported by: 1. Monetary Policy Divergence: ECB’s dovish cuts vs. BoE’s hawkish stance. 2. Economic Performance: The UK outperforms the Eurozone in GDP growth and inflation control. 3. Political Stability: UK stability contrasts with Eurozone uncertainties.
Short
by GreenhillFin
EURGBP - Europe will pass this winter safely!?The EURGBP currency pair is below the EMA200 and EMA50 in the 4-hour timeframe and is moving in its descending channel. If the resistance range is broken, we can witness the upward movement of this currency pair. A valid break of the drawn upward trend line will provide us with the downward path of this currency pair to the level of 0.82400. Bloomberg has reported that the cessation of Russian natural gas flow to Europe via Ukraine is likely to heighten competition with Asia and drive up the cost of alternatives. Ukrainian President Volodymyr Zelensky stated on Wednesday that Ukraine hopes increased gas supplies from the U.S. and other producers to Europe will make prices more acceptable. The flow of gas from Russia to Europe through Ukraine stopped on Wednesday, marking the end of over five decades of this route being the primary channel for gas to the Eurozone. While this move was anticipated after months of political tension, Europe still needs to replace about 5% of its gas supply and may increasingly rely on storage levels that have now dropped below average. The European Commission noted that the suspension of gas flow via Ukraine on January 1st was a foreseen scenario, and the EU is prepared for it. Christine Lagarde, President of the European Central Bank (ECB), expressed optimism that the ECB could achieve a 2% inflation rate by 2025. She stated, “We have made significant progress in reducing inflation in 2024 and hope that 2025 will be the year we reach our target as expected and planned in our strategy. However, we will continue our efforts to ensure inflation stabilizes at the 2% medium-term target.” Meanwhile, UBS has noted that the value of the U.S. dollar has increased, suggesting that investors can sell dollars more robustly and convert them to currencies such as the British pound or the Australian dollar. Despite the recent rise in the dollar’s value, driven by shifts in expectations around Federal Reserve policies and U.S. government actions, the bank believes the dollar remains overvalued. While UBS does not anticipate a sharp decline in the dollar’s value in the short term, it sees opportunities for investors to pivot toward more attractive currencies. The British pound (GBP) and Australian dollar (AUD) are among its top picks due to their potential to perform well amidst evolving global monetary conditions. Additionally, according to data from Nationwide, house prices in the UK reached near-record levels at the end of last year. This indicates that the real estate market continues to gain momentum. Nationwide reported that house prices rose by 0.7% on a monthly basis, reaching an average of £269,426 (equivalent to $337,500). This figure is only slightly below the record high of £273,751 recorded in the summer of 2022.
Long
by Ali_PSND
Bearish drop?EUR/GBP is reacting off the pivot and could drop to the 1st support. Pivot: 0.82747 1st Support: 0.82239 1st Resistance: 0.83031 Risk Warning: Trading Forex and CFDs carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Forex and CFDs may not be suitable for all investors, so please ensure that you fully understand the risks involved and seek independent advice if necessary. Disclaimer: The above opinions given constitute general market commentary, and do not constitute the opinion or advice of IC Markets or any form of personal or investment advice. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, are intended only to be informative, is not an advice nor a recommendation, nor research, or a record of our trading prices, or an offer of, or solicitation for a transaction in any financial instrument and thus should not be treated as such. The information provided does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it. Please be aware, that past performance is not a reliable indicator of future performance and/or results. Past Performance or Forward-looking scenarios based upon the reasonable beliefs of the third-party provider are not a guarantee of future performance. Actual results may differ materially from those anticipated in forward-looking or past performance statements. IC Markets makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or any information supplied by any third-party.
Short
by ICmarkets
1
Bearish Outlook for EURGBP: A Selling Opportunity AwaitsThe EURGBP trading pair is signaling a sell opportunity based on our analysis with the EASY Trading AI strategy. The current entry price stands at 0.8314, with a clear take profit level set at 0.82860667, while the stop loss is positioned at 0.83328667. Recent market trends suggest a potential drawback for the Euro against the British Pound, influenced by macroeconomic factors such as the anticipated interest rate decisions from the Bank of England and ongoing discussions surrounding the European Central Bank's monetary policy. As the market navigates through uncertainty, the prevailing bearish sentiment strengthens our sell decision. Technically, the indicators are showing signs of weakness for the Euro, making the 0.8314 entry point a strategic choice. The signal offered by our EASY Trading AI further corroborates this prediction, providing a robust framework for risk management. Remember, effective trading isn't just about what the numbers say; it's about understanding the broader market context. Always ensure you stick to your stop-loss to safeguard your capital while capitalizing on potential profits as you navigate this trade. For timely alerts and insights, consider utilizing our Telegram channels for real-time updates. Happy trading!
Short
by ForexRobotEasy
Elliott Wave View: EURGBP Rally Expected to FailShort Term Elliott Wave view of EURGBP suggests decline from 8.8.2024 high ended as wave (1) at 0.8219 as an impulse. Down from 8.8.2024 high, wave 1 ended at 0.8295 and rally in wave 2 ended at 0.844. Wave 3 lower ended at 0.826 and rally in wave 4 ended at 0.8375. Down from there, wave ((i)) of 5 ended at 0.8268 and wave ((ii)) of 5 ended at 0.8364. Wave ((iii)) of 5 lower ended at 0.8225 and wave ((iv)) of 5 ended at 0.8327. Final wave ((v)) of 5 ended at 0.8222. This completed wave (1) in higher degree. Wave (2) corrective rally is in progress with internal subdivision as a zigzag Elliott Wave structure. Up from wave (1), wave A ended at 0.8313 and pullback in wave B ended at 0.8268. Wave C higher is in progress as an impulse structure. Up from wave B, wave ((i)) ended at 0.8314 and pullback in wave ((ii)) ended at 0.8272. Near term, as far as pivot at 0.8219 low stays intact, expect pullback to find support in 3, 7, 11 swing for further upside. Target higher for wave (2) is 100% – 161.8% Fibonacci extension of wave A. This area comes at 0.836 – 0.8419 where sellers can appear for 3 waves pullback at least.
by Elliottwave-Forecast