#EURGBP @ 0.87220 EURGBP is expected to decline to near 0.8700 ahead of the UK Autumn Budget release. (Pivot Orderbook analysis)

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• EURGBP is expected to decline to near 0.8700 ahead of the UK Autumn Budget release.
• The BOE needs to plan more rate hikes to safeguard the economy from inflation shocks.
• A recession situation in Eurozone would be preferable to scale down inflationary pressures.

The pair currently trades last at 0.87220.

The previous day high was 0.8776 while the previous day low was 0.8713. The daily 38.2% Fib levels comes at 0.8737, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.8752, expected to provide resistance.

The EURGBP pair is displaying back-and-forth moves in a narrow range of 0.8717-0.8728 in the Tokyo session. The asset is expected to continue its downside momentum after a downside break towards the round-level support at 0.8700 as a significant surge in the UK inflation rate has triggered odds of further policy tightening by the Bank of England (BOE). Also, investors are focused on the release of the UK Autumn Budget.

The headline UK Consumer Price Index (CPI) has jumped to 11.1% vs. the projection of 10.7%. A historic surge in inflationary pressures led by accelerating oil prices and a tight labor market has cleared that a peak for price growth is still ahead. The absence of exhaustion signs in the price rise index creates pressure on the Bank of England (BOE) policymakers to multiply interest rates further.

Meanwhile, the focus on UK Autumn Budget is also keeping the Euro bulls at the back foot. UK Prime Minister Rishi Sunak and Chancellor Jeremy Hunt are entitled to fill the GBP 60bln financial hole that could be achieved by sheer fiscal tightening measures. Investors are awaiting the extent of spending cuts and tax hikes to determine the scale of the decline in consumer spending.

On the Eurozone front, European Central Bank’s (ECB) policymaker Pablo Hernandez de Cos said on Wednesday that the inflation spike is proving highly persistent and has also broadened, as reported by Reuters. ECB policymaker further added that balance sheet reduction in the euro area should be very gradual and predictable. And, a recession situation would trim the inflationary pressures vigorously.

Technical Levels: Supports and Resistances

EURGBP currently trading at 0.8722 at the time of writing. Pair opened at 0.8724 and is trading with a change of -0.02 % .

The pair is trading above its 20 Daily moving average @ 0.8701, below its 50 Daily moving average @ 0.8734 , above its 100 Daily moving average @ 0.8611 and above its 200 Daily moving average @ 0.8524

The previous day high was 0.8776 while the previous day low was 0.8713. The daily 38.2% Fib levels comes at 0.8737, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.8752, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 0.8699, 0.8675, 0.8636
• Pivot resistance is noted at 0.8762, 0.88, 0.8825

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