The British pound has strengthened against the euro, with the EURGBP pair reaching a high of 0.8566, following the Bank of England’s decision to increase interest rates. However, this increase has raised concerns about the possibility of a recession.

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• Pound gains ground as BoE boosts rates; EUR/GBP pair hits 0.8566, sparking recession concerns.

The pair currently trades last at 0.85620.

The previous day high was 0.8636 while the previous day low was 0.8574. The daily 38.2% Fib levels comes at 0.8598, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.8612, expected to provide resistance.

The EUR/GBP dropped for the second straight day following Thursday’s Bank of England (BoE) monetary policy decision to raise rates by 50 basis points (bps) which bolstered the Pound Sterling (GBP) against the Euro (EUR). In addition, a deceleration in business activity in the Eurozone (EU) and the UK increased recession fears. Still, upbeat retail sales in the UK exacerbated a leg-down in the EUR/GBP. At the time of writing, the EUR/GBP exchanges hands at 0.8566 after hitting a high of 0.8607.

Given the fundamental backdrop, the EUR/GBP is set to extend its downtrend. Also, the pair crossed below the 20-day Exponential Moving Average (EMA) at 0.8593, a bearish signal that exacerbated the cross fall toward daily lows reached at around 0.8535 before stabilizing at current exchange rates.

Sellers will need the EUR/GBP printing a daily close below the June 22 daily low of 0.8569 to cement the downtrend. That would put at risk support levels like the current two-day low of 0.8535, followed by the weekly low of 0.85255, before challenging the year-to-date (YTD) low of 0.8518.

Otherwise, EUR/GBP buyers would remain hopeful of cracking the 0.8600 figure, though firstly, they need to conquer the 20-day EMA. Upside risks above the 0.86 figure lie at a June 22 high of 0.8639, with buyers eyeing the 50-day EMA as the next ceiling level at 0.8657.

Technical Levels: Supports and Resistances

EURGBP currently trading at 0.8566 at the time of writing. Pair opened at 0.8594 and is trading with a change of -0.33 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 0.8592, 50 SMA 0.8691, 100 SMA @ 0.8759 and 200 SMA @ 0.8751.

The previous day high was 0.8636 while the previous day low was 0.8574. The daily 38.2% Fib levels comes at 0.8598, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.8612, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 0.8567, 0.8539, 0.8504
• Pivot resistance is noted at 0.8629, 0.8664, 0.8692

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