EUR/GBP rebound fades bounce 0.8800 ahead of UK Budget Report
- EUR/GBP remains sidelined after snapping four-day downtrend with bounce off two-week low.
- GBP retreat amid mixed UK employment report, hopes of lucrative British budget.
- Investment zones are the key incentive in the new government’s annual buget.
- Eurozone Industrial Production for January, risk catalysts are also important for clear directions.
EUR/GBP treads water around 0.8830, following a rebound from a fortnight low to snap the four-day downtrend, as traders await the key UK Budget Report for fresh impulse. It should be noted that the latest catalysts from Britain haven’t been too impressive, which in turn lure the British Pound (GBP) bears as the key event looms.
That said, UK’s headline ILO Unemployment Rate reprinted 3.7% for three months to January versus 3.8% expected whereas the Claimant Count Change improved to -11.2K in February from -30.3K (revised) prior and -12.4K market forecasts. Further details suggest that the Average Earnings Including Bonus matched 5.7% analysts’ estimations for three months to January, versus upwardly revised 6.0% prior, whereas the ex-Bonus figures came in as 6.5% compared to 6.6% expected and 6.7% previous readings.
Following the UK data, the odds of the Bank of England’s (BoE) easy rate hikes, or policy pivot, gained attention. “Growth in pay in Britain - which the Bank of England is watching closely as it weighs up whether to pause its run of interest rate hikes next week - lost pace in the three months to January, official data showed on Tuesday,” said Reuters.
On the other hand, European Central Bank (ECB) policymaker Yannis Stournaras said, during an nterview with a Greek newspaper, that he doesn’t see any impact from the collapse of Silicon Valley Bank (SVB) on Eurozone banks. Previously, Eurogroup's President Paschal Donohoe mentioned, “Euro-area has very limited exposure to SVB.”
Apart from that, the fading Brexit optimism and comparatively more hawkish European Central Bank (ECB) policymakers, than the BoE, also probe the EUR/GBP bulls.
Looking ahead, the British government’s annual Budget Report and Eurozone Industrial Production for January, expected 0.4% MoM versus -1.1% prior, will be important for EUR/GBP traders to watch for clear directions. Apart from that, the headlines surrounding the SVB and Russia could also entertain the cross-currency pair traders.
Technical analysis
Despite bouncing off a two-month-old ascending support line, currently around 0.8800, the EUR/GBP bulls need validation from the 50-DMA hurdle of 0.8840 to retake control.