EUR/GBP headed toward biggest gain in 3 weeks

The euro is about to post the highest daily gains in at least three weeks against the pound.  EUR/GBP bounced from two-month lows having the most significant correction after a decline of 500 pips, that took place from November 2 until yesterday.

EUR/GBP recovers but still…

The pair printed a fresh daily high at 0.8571 during the American session as GBP/USD traded below 1.2400. Despite gaining more 50 pips on Tuesday the euro has not been able to erase yesterday’s losses and the short-term outlook continues to favor the pound. 

A break and a consolidation on top of 0.8600, that has become a key resistance during the last weeks, could provide support to the euro for an extension of the recovery. 

Autumn statement

On Wednesday, the UK Chancellor of the Exchequer, Philip Hammond, will deliver his first Autumn Statement. According to analysts from Rabobank, it should direct some attention back to the UK economy and they noted that the Chancellor received some good news with a lower than expected borrowing requirement for October. 

“However, given the slow pace of growth in UK tax receipts this year, it seems unlikely that the government will meet the targets for deficit improvement laid out in March. This should limit scope for large infrastructure spending announcements which could reduce near-term upside potential for GBP vs. the EUR. The recent lows near EUR/GBP0.8490 is likely to act as support”, concluded analysts from Rabobank.