EUR/GBP remains on the defensive below 0.8700 mark post-Eurozone PMIs for October.

EUR/GBP recovers a few pips from the daily low, though lacks follow-through.

Looming recession risks weigh on the euro and act as a headwind for the cross.

Aggressive ECB rate hike bets offer some support and help limit the downside.

The EUR/GBP cross opens with a modest bearish gap on the first day of a new week, though finds support ahead of mid-0.8600s and recovers a few pips from a multi-day low. The cross, however, remains on the defensive through the early European session and is currently trading with modest intraday losses, below the 0.8700 mark.

The shared currency’s relative underperformance comes amid the protracted Russia-Ukraine war, which could lead to a deeper economic downturn in the Eurozone. The fears were further fueled by the rather unimpressive flash Eurozone PMI prints released this Monday. S&P Global reported that business activity in Germany’s manufacturing sector continued to contract at a faster pace in early October.

Adding to this, the flash Eurozone Manufacturing PMI slumped to 46.6 in October against estimates for a reading of 47.8, revealing a further contraction in the business activity. Moreover, the Services PMI edged lower to 48.2 from 48.8 as expected and the Composite PMI declined to 47.1 from 48.1. Apart from this, a strong pickup in the US dollar demand is further weighing on the common currency.

That said, rising bets for another jumbo 75 bps rate increase by the European Central Bank act as a tailwind for the euro. Hence, the focus remains glued to this week’s ECB monetary policy meeting. In the meantime, diminishing odds for a bigger 100 bps rate hike by the Bank of England (BoE) in November keeps a lid on any meaningful upside for sterling and helps limit losses for the EUR/GBP cross.

GBP/USD falls toward 1.1300 after UK PMI data

GBP/USD lost its traction and fell toward 1.1300 with the initial reaction to disappointing PMI surveys from the UK, which showed that the private sector’s economic activity continued to contract in October. Meanwhile, Rishi Sunak remains the favourite to replace Truss.


EUR/USD falls toward 0.9800 on weak German PMI data

EUR/USD lost its traction and declined toward 0.9800 in the European session on Monday. The data from Germany and the eurozone showed private sector’s business activity continued to contract in early October, weighing on the shared currency. Investors await US PMI data.


USD/JPY steadies around 149.00 after rollercoaster moves on alleged Japan intervention

USD/JPY treads water around 148.85 following a volatile start to the week which initially refreshed a fortnight low before recalling the buyers ahead of Monday’s European session.


Gold falls to $1,650 area despite retreating US yields

After having touched its strongest level in more than a week at $1,670 earlier in the day, gold lost its traction and declined to the $1,650 area. Although the 10-year US Treasury bond yield is down 1.5% on the day, the risk-averse market environment weighs on XAU/USD.

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