#EURGBP @ 0.87392 is approaching weekly highs around 0.8780 as an ECB rate hike may trim BOE/ECB policy divergence. (Pivot Orderbook analysis)

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• EUR/GBP is approaching weekly highs around 0.8780 as an ECB rate hike may trim BOE/ECB policy divergence.
• A pile of debt is ready to weigh down the confidence of new UK PM Rishi Sunak.
• A second consecutive 75 bps rate hike by the ECB would push interest rates to 2%.

The pair currently trades last at 0.87392.

The previous day high was 0.8764 while the previous day low was 0.8662. The daily 38.2% Fib levels comes at 0.8725, expected to provide support. Similarly, the daily 61.8% fib level is at 0.8701, expected to provide support.

The EUR/GBP pair is concluding its time correction move to near 0.8740 and is aiming to test weekly highs at 0.8781. The cross is picking up bids as clarity over novel UK leadership has trimmed favors for pound bulls. Also, Thursday’s monetary policy announcement by the European Central Bank (ECB), will trim the Bank of England (BOE)-ECB policy divergence ahead.

It is clear that Rishi Sunak will be the next UK Prime Minister after the shortest-ever service-serving UK PM Liz Truss after the former won the leadership contest. Followed by a withdrawal from contestants short-listed for UK PM: Boris Johnson and Penny Mordaunt, Rishi Sunak is ready to hold the UK’s highest chair ahead.

Well, big power is coming with much bigger responsibilities amid the pile-up of debt in the UK economy, the highest since 1960. It would be worth watching how newly appointed Finance Minister Jeremy Hunt and UK’s novel leader Rishi Sunak will fetch the confidence of international investors and bring financial stability.

Apart from financial stability, the deepening energy crisis is also a critical issue for the novel leadership. Headlines from Bloomberg revealed that the EU may join hands with the UK and Switzerland to combat escalating energy prices. The EU is planning a price cap on energy prices to delight households against soaring energy bills. The strategy is to be executed without boosting demand or delivery of electricity to foreign consumers at subsidized prices.

In response to that, the Trading bloc’s executive arm is advising EU members that such a price limit would have to be extended to power-importing countries like the UK or Switzerland for it to be effective, reported Bloomberg.

This week, ECB President Christine Lagarde may tighten its policy further to contain the soaring inflationary pressures. As per analysts from Rabobank, the ECB may announce a second consecutive 75 basis point (bps) interest rate hike, which will push rates to 2%. They see the deposit rate reaching 3% by March next year.

Technical Levels: Supports and Resistances

EURGBP currently trading at 0.8742 at the time of writing. Pair opened at 0.8754 and is trading with a change of -0.14 % .

The pair is trading below its 20 Daily moving average @ 0.8755, above its 50 Daily moving average @ 0.8677 , above its 100 Daily moving average @ 0.8592 and above its 200 Daily moving average @ 0.8496

The previous day high was 0.8764 while the previous day low was 0.8662. The daily 38.2% Fib levels comes at 0.8725, expected to provide support. Similarly, the daily 61.8% fib level is at 0.8701, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 0.8689, 0.8625, 0.8587
• Pivot resistance is noted at 0.8791, 0.8829, 0.8893

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