#EURGBP at 0.86077 continues to correct as it appears more likely that the BoE will increase interest rates.

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• EUR/GBP extends correction as more rate hikes from the BoE look warranted.

The pair currently trades last at 0.86077.

The previous day high was 0.8648 while the previous day low was 0.8601. The daily 38.2% Fib levels comes at 0.863, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.8619, expected to provide resistance.

The EUR/GBP pair weakens after the upside momentum fades. The cross declines towards the round-level support of 0.8600 as the Bank of England (BoE) leaves the door open for further policy-tightening ahead.

Last week, the BoE raises interest rates further by 25 basis points (bps) to 5.25%. The central bank elevates policy rates for the 14th time in a row amid the fight against the stubborn Consumer Price Index (CPI). Inflation in the United Kingdom economy softens to 7.9% from its peak but fears of persistence deepen as global oil prices recover.

Meanwhile, the aggressive rate-tightening cycle by the UK central bank dampens the labor market. UK firms slowed down permanent staff hiring last month by the most since mid-2020 due to rising concerns about the economic outlook, per a survey by the Recruitment & Employment Confederation (REC) and KPMG, Reuters reported.

REC Chief Executive Neil Carberry said the jobs market remained “fairly robust” despite the slowdown in permanent placements.

About the inflation outlook, BoE chief economist Huw Pill said on Friday that successive interest-rate hikes are cooling the labor market and easing inflationary pressures. He further added that higher unemployment and lower vacancies would eventually lead to lower wage growth.

On the Eurozone front, Sentix Investor Confidence for August surprisingly improves to 18.9 while investors were expecting deterioration to -23.4 from July’s reading of -22.5. The confidence of institutional investors in economic prospects improves due to easing inflationary pressures and a tight labor market. Also, interest rates by the European Central Bank (ECB) are expected to peak sooner.

Technical Levels: Supports and Resistances

EURGBP currently trading at 0.8607 at the time of writing. Pair opened at 0.8633 and is trading with a change of -0.3 % .

The pair is trading above its 20 Daily moving average @ 0.8593, above its 50 Daily moving average @ 0.8588 , below its 100 Daily moving average @ 0.8678 and below its 200 Daily moving average @ 0.8725

The previous day high was 0.8648 while the previous day low was 0.8601. The daily 38.2% Fib levels comes at 0.863, expected to provide resistance. Similarly, the daily 61.8% fib level is at 0.8619, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 0.8607, 0.8581, 0.856
• Pivot resistance is noted at 0.8653, 0.8674, 0.87

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