EUR/GBP may have further to slide
With the upcoming economic data from the UK, combined with the lack of interest from the ECB to raise rates any time soon, EUR/GBP could become extremely volatile this week!
Share this:
The Currency Pair of the Week this week is GBP/USD because of the reaction from the US Dollar to the recent inflation data. However, it could just have easily been EUR/GBP. The UK is releasing the Claimant Count this week, which will be the first look at jobs data since the furlong program ended on September 30th. On Wednesday, the UK releases their inflation data and on Friday they release Retail Sales (See the Currency Pair of the Week for expectations). There is potential for a great deal of volatility in GBP this week. However, The EU will release CPI data of its own this week. This will be the October Final look. Remember that the EU releases its Flash CPI on the last day of the prior month. Therefore, this number should not add much volatility to the Euro unless there is a big difference between the flash reading and the final print. The flash reading was 4.1% YoY for the headline CPI vs 3.4% YoY in September. The Core CPI was 2.1% YoY vs 1.9% in September.
The ECB met on October 28th, a day prior to the flash inflation reading. Christine Lagarde told markets at the press conference afterwards that she expects PEPP to end in March 2022, as planned. However, she also said that higher inflation will last longer than expected and that conditions for a rate rise are not likely to be met in the timeframe expected by the markets, nor soon thereafter. Therefore, during the December meeting, at which updated growth and inflation forecasts will be released, the Committee will discuss new options for a bond buying program.
Trade EUR/GBP now: Login or open a new account!
One week later, the BOE met and left rates and their bond buying program unchanged, despite earlier comments from BOE Governor Bailey that they may have to raise rates in order to control inflation. GBP traders were upset with the meeting outcome and immediately sold the Pound.
EUR/GBP has been in a downward trend since December 2020. First it fell aggressively from 0.9200 to 0.8472 by April 5th, then fell more orderly in downward channel from 0.8719 on April 16th to the October 27th lows at 0.8403. After the BOE meeting the pair bounced to trendline resistance at the top of the channel and the 200 Day Moving Average near 0.8574. However, the resistance held, and the pair sold off on Friday and Monday, as markets became fearful of high inflation data from the UK this week.
Source: Tradingview, Stone X
On a 240-minute chart, EUR/GBP is holding the 61.8% Fibonacci retracement from the lows of October 26th to the highs of November 5th, near 0.8476. The pair is also holding horizontal support at 0.8469. Below there, support is at the bottom of the channel near 0.8416 and then the lows from October 26th, at 0.8403. First resistance is at a confluence of the 50 Day Moving Average and prior Intra-day lows between 0.8515 and 0.8520. Above there, resistance is at the top, downward sloping trendline of the channel near 0.8571 and then the highs from November 5th at 0.8595.
Source: Tradingview, Stone X
Over the last 2 days, EUR/GBP has moved from a high of 0.8567 to a low of 0.8471, near 100 pips. With the upcoming economic data from the UK, combined with the lack of interest from the ECB to raise rates any time soon, EUR/GBP could become extremely volatile this week!
Learn more about forex trading opportunities.
The Currency Pair of the Week this week is GBP/USD because of the reaction from the US Dollar to the recent inflation data. However, it could just have easily been EUR/GBP. The UK is releasing the Claimant Count this week, which will be the first look at jobs data since the furlong program ended on September 30th. On Wednesday, the UK releases their inflation data and on Friday they release Retail Sales (See the Currency Pair of the Week for expectations). There is potential for a great deal of volatility in GBP this week. However, The EU will release CPI data of its own this week. This will be the October Final look. Remember that the EU releases its Flash CPI on the last day of the prior month. Therefore, this number should not add much volatility to the Euro unless there is a big difference between the flash reading and the final print. The flash reading was 4.1% YoY for the headline CPI vs 3.4% YoY in September. The Core CPI was 2.1% YoY vs 1.9% in September.
The ECB met on October 28th, a day prior to the flash inflation reading. Christine Lagarde told markets at the press conference afterwards that she expects PEPP to end in March 2022, as planned. However, she also said that higher inflation will last longer than expected and that conditions for a rate rise are not likely to be met in the timeframe expected by the markets, nor soon thereafter. Therefore, during the December meeting, at which updated growth and inflation forecasts will be released, the Committee will discuss new options for a bond buying program.
Trade EUR/GBP now: Login or Open a new account!
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
One week later, the BOE met and left rates and their bond buying program unchanged, despite earlier comments from BOE Governor Bailey that they may have to raise rates in order to control inflation. GBP traders were upset with the meeting outcome and immediately sold the Pound.
EUR/GBP has been in a downward trend since December 2020. First it fell aggressively from 0.9200 to 0.8472 by April 5th, then fell more orderly in downward channel from 0.8719 on April 16th to the October 27th lows at 0.8403. After the BOE meeting the pair bounced to trendline resistance at the top of the channel and the 200 Day Moving Average near 0.8574. However, the resistance held, and the pair sold off on Friday and Monday, as markets became fearful of high inflation data from the UK this week.
Source: Tradingview, Stone X
On a 240-minute chart, EUR/GBP is holding the 61.8% Fibonacci retracement from the lows of October 26th to the highs of November 5th, near 0.8476. The pair is also holding horizontal support at 0.8469. Below there, support is at the bottom of the channel near 0.8416 and then the lows from October 26th, at 0.8403. First resistance is at a confluence of the 50 Day Moving Average and prior Intra-day lows between 0.8515 and 0.8520. Above there, resistance is at the top, downward sloping trendline of the channel near 0.8571 and then the highs from November 5th at 0.8595.
Source: Tradingview, Stone X
Over the last 2 days, EUR/GBP has moved from a high of 0.8567 to a low of 0.8471, near 100 pips. With the upcoming economic data from the UK, combined with the lack of interest from the ECB to raise rates any time soon, EUR/GBP could become extremely volatile this week!
Learn more about forex trading opportunities.
Related tags:
Latest market news
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
AUD/USD Q4 Outlook: RBA and Fed Hikes Set the Tone
AUD/USD enters Q4 with RBA and Fed hikes in focus as sticky inflation, rising unemployment and US dollar strength shape the Australian dollar.
USD/JPY Q4 2026 Outlook: Hawkish Fed Pricing Clashes With Intervention Risk
The year-end tug-of-war is clear: hawkish Fed pricing supports USD/JPY, while intervention risk limits the upside.
Japanese Yen Forecast: USD/JPY 4% Rally Challenges Post-Intervention Downtrend 9 24 2026
USD/JPY momentum has shifted sharply higher, putting a major resistance confluence in focus as U.S. and Japanese event risk builds.
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.