The EUR/GBP pair plummeted to a fresh 22-month low on Friday, briefly touching the 0.8400 mark before staging a minor recovery. However, the pair remains firmly in the grips of a three-month downtrend that began in April. Political turmoil in France and anticipation for the Bank of England’s (BoE) upcoming rate decision continue to weigh on the Euro (EUR) and Sterling (GBP) respectively.
French Election Jitters and Euro’s Woes
The Euro’s woes stem from the impending French snap elections, triggered by President Macron’s recent dissolution of the government. The rise of the far-right National Rally (RN) party, led by Marine Le Pen, has fueled concerns about political instability and its potential impact on the European Union’s economic landscape. Le Pen’s populist policies, though appealing to some voters, have raised eyebrows in financial markets due to their potential fiscal implications.
BoE Rate Decision in the Spotlight
Meanwhile, Sterling traders are anxiously awaiting the UK Consumer Price Index (CPI) update and the BoE’s interest rate decision next week. While no change in rates is expected, investors will closely monitor any shifts in the Monetary Policy Committee’s (MPC) voting patterns, particularly regarding potential future rate cuts.
EUR/GBP Technical Outlook: Bears Reign Supreme
The EUR/GBP pair is firmly in bearish territory, having suffered a 1.2% decline from June’s peak near 0.8540. The pair is on track for its fifth consecutive weekly loss and has plunged nearly 3% from its 2024 peak.
While a brief rebound to the 200-day Exponential Moving Average (EMA) at 0.8460 is possible, sellers are expected to remain in control, aiming to push the pair below the critical 0.8400 level.
