#EURGBP @ 0.87749 has extended its recovery above 0.8770 ahead of German GDP data. (Pivot Orderbook analysis)

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• EUR/GBP has extended its recovery above 0.8770 ahead of German GDP data.
• UK FM Jeremy Hunt has promised to halve the double-digit inflation figure ahead.
• The ECB is expected to continue hiking interest rates by 50 bps ahead to tame stubborn inflation.

The pair currently trades last at 0.87749.

The previous day high was 0.8805 while the previous day low was 0.8765. The daily 38.2% Fib levels comes at 0.878, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.879, expected to provide resistance.

The EUR/GBP pair has demonstrated a responsive buying action after dropping to near 0.8760 in the Tokyo session. The cross has extended its gains above 0.8770 ahead of the preliminary German Gross Domestic Product (GDP) (Q4) release on Monday. Higher interest rates by the European Central Bank (ECB) have already impacted the scale of economic activities in Eurozone. Apart from that supply chain disruptions have been a major issue for firms.

As per the consensus, the German GDP is seen stagnant against a marginal expansion of 0.4% on a quarterly basis. The labor market in Eurozone has remained tight and the economy has also shown resilience after easing energy prices. Therefore, the street is expecting a shallow recession, not a deeper one as expected earlier, in the shared continent.

The mega event that will trigger volatility for the Euro will be the interest rate decision by the European Central Bank (ECB). Last week, ECB Governing Council member Gabriel Makhlouf cited “We need to continue to increase rates at our meeting next week – by taking a similar step to our December decisions,” He further added “Our future policy decisions need to continue to be data-dependent given the prevailing uncertainty,” as reported by Reuters.

Meanwhile, the Pound Sterling is reacting negatively to the commentary from United Kingdom Finance Minister Jeremy Hunt. The UK FM stated on Friday that the “best tax cut right now is a cut in inflation.” On paper, the UK economy is still operating with double-digit figure inflation and showing no signs of deceleration amid rising food prices and the labor cost index.

On the Brexit front, UK and European Union negotiators are nearing a provisional agreement on post-Brexit arrangements for Northern Ireland, putting them in touching distance of a final settlement after years of often fraught talks, as reported by Bloomberg. The two sides are dealing with intensive negotiations for weeks and delegates are close to finding solutions at a technical level covering most pending issues including customs, state aid, and sanitary checks on agri-food goods, Bloomberg added.

Technical Levels: Supports and Resistances

EURGBP currently trading at 0.8773 at the time of writing. Pair opened at 0.8769 and is trading with a change of 0.05 % .

The pair is trading below its 20 Daily moving average @ 0.881, above its 50 Daily moving average @ 0.8735 , above its 100 Daily moving average @ 0.8735 and above its 200 Daily moving average @ 0.8622

The previous day high was 0.8805 while the previous day low was 0.8765. The daily 38.2% Fib levels comes at 0.878, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.879, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 0.8754, 0.874, 0.8715
• Pivot resistance is noted at 0.8794, 0.8819, 0.8834

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