EUR/USD, GBP/USD rally while EUR/GBP stabilises as US debt ceiling bill is passed
Outlook on EUR/USD, GBP/USD and EUR/GBP as the US Senate passes the debt ceiling bill.
EUR/USD rallies off two-month low
EUR/USD is seen rallying off its two-month low at $1.0636 as the US dollar declines. The US debt ceiling bill has been agreed, preventing a US default.
The break through the five-week downtrend line at $1.072 puts the $1.0789 early-April low back on the cards. Above it resistance can be found between the mid-February high and 10 April low at $1.0804 to $1.0832.
Slips should find support along the breached downtrend line and at the $1.0702 26 May low.
EUR/GBP slips to five-month low on softer Eurozone inflation
EUR/GBP’s slide to levels last traded in December of last year, on Thursday to £0.8568 on softer Eurozone headline and core inflation, is levelling out on short-covering ahead of the weekend.
With the European Central Bank’s (ECB's) tightening expectations diminishing and those of the Bank of England (BoE) remaining in play, further downside may be seen next week.
Major support between the September-to-December lows at £0.8572 to £0.8548 may thus be revisited next week.
GBP/USD surges higher on rate hike expectation differential
GBP/USD’s swift recovery off its $1.2345 to $1.2309 April-to-May support zone is gaining traction as the US dollar is starting to depreciate.
With the US debt ceiling being lifted and commentary by the Federal Reserve (Fed) officials of a possible 'skip' in the June meeting to acquire more data to get a clearer picture of the US economy being heard, the greenback is on the back foot.
A comparatively more hawkish BoE which is expected to hike again later this month due to elevated UK inflation has pushed the GBP/USD pair towards its $1.2546 mid-April and mid-May highs. Further up beckons the May peak at $1.2679. Support comes in at the 24 May high at $1.2469.
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