- EUR/GBP takes offers to refresh intraday low, pares the biggest daily gains in a week.
- A jump in German gas prices, fears of extended economic woes due to Russia-Ukraine tussle weigh on prices.
- Firmer British car output, political optimism appears to favor sellers.
- German IFO, final readings of Q2 GDP could entertain traders.
EUR/GBP fades bounce off weekly low, marked the previous day, as energy crisis in Germany amplifies recession calls. Also exerting downside pressure on the cross currency pair is the recently firmer UK data and hopes of a strong government in Britain.
British car production rose for a third straight month in July, 8.6% higher than a weak comparative last year, when car makers were struggling with acute shortages of chips and COVID-related absences, the Society of Motor Manufacturers and Traders (SMMT) said on Thursday, reported Reuters.
Elsewhere, recently increased odds favoring ex-Chancellor Rishi Sunak to become the next UK Prime Minister (PM) keep the EUR/GBP bears hopeful as he defends the Bank of England (BOE) while also braces for less spending and control of the power bill. Also favoring Sunak’s chances of being the UK PM is the medium bias towards Brexit and his financial knowledge, especially at the time of the recession fears.
Britain's next prime minister must adopt radical ideas – such as discounted power tariffs, energy bill freezes or a "solidarity" tax hike for higher earners – to cushion the energy price shock for a broad swathe of households, Reuters quotes the UK’s think tank the Resolution Foundation on Thursday.
On the other hand, rallying prices of the Dutch Title Transfer Facility (TTF) natural gas futures portray the energy crisis in Germany, as well as in the bloc, amid recently increased sanctions on Russian oil. On the same line were comments from an influential economist Marcel Fratzscher of the German Institute for Economic Research mentioned, per Reuters, “The economic impact on Germany of Russia's invasion of Ukraine will last years.”
Looking forward, the final readings of Germany’s second quarter (Q2) GDP and IFO sentiment figures for August may entertain EUR/GBP traders.
Technical analysis
EUR/GBP buyers remain hopeful of refreshing the monthly high, currently around 0.8510, unless the quote provides a daily close below an upward sloping support line from August 02, around 0.8415 by the press time.