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EURGBP: Sterling Finds Buyers and Attempts a Rebound

EURGBP was 0.25% higher this morning despite data showing the third-highest budget deficit ever. The pair now eyes key technical support to see if it can bounce or go back to recent lows.

Research from Barclays expects Euro government bond issuance to be lower in 2021, compared to 2020, with much of the dip attributed to periphery nations. This is due to the EU funding programs that have been enacted following the virus economic damage. The bank suggests a drop of 80bn euro in Spain and 40bn euro in France as two examples of countries issuing lower government bonds.

Brexit is back in the headlines and after the recent shocks regarding the U.K. threat to pull out, and later to implement the Internal Market Bill, there is hope amongst some that these hardline tactics will lead to a breakthrough in talks as the deadline approaches for an agreement in mid-October.  

Today saw consumer confidence come in lower in the U.K. with a reading of -25 against expectations of -27. There was data from the ONS, which showed UK government borrowing hit £173.7bn since April. The budget deficit was £35.9bn in August, which was the third-highest on record. The data was in-line with economist expectations and this has helped the pound this morning.

EURGBP Technical Outlook

EURGBP is falling further into the price range and is seeking to test the support at 0.9080. This level comes in just above the 50-day moving average and should be important for the next direction. A close below the moving average could see us test the 0.8870 support again. The Investing Cube team is currently available to assist all levels of traders with a Forex Trading Course or one-to-one coaching.  

EURGBP Daily Chart