EUR/GBP: Holding Support as Bailey's Warnings Weigh on Sterling

EURGBP is consolidating in a narrow range between 0.85752 and 0.85126 for the past four days.Intraday  bias  remains bullish  as long as support 0.8480 holds. It hits an  intraday high of 0.85356 and is currently trading around 0.8312.

Bank of England Governor Andrew Bailey has expressed significant concern regarding the recent increase in employer National Insurance contributions, highlighting its adverse effects on the UK labor market. He pointed out that this policy change is already resulting in notable job losses and a deceleration in wage growth. According to Bailey, anecdotal reports from businesses indicate that many are adjusting their staffing levels and reducing pay offers by approximately 1–2 percentage points. Furthermore, he cited data showing that over 100,000 jobs were lost in May, and that the prevalence of pay rise agreements is diminishing—developments that align with his previous warnings about the impact of higher taxation on employment. While a softer labor market could potentially contribute to easing inflationary pressures, the Bank of England remains vigilant in monitoring these trends as it formulates future monetary policy decisions.

Technical Analysis

The pair is currently trading above 55 and 200- EMA and 365-EMA on the 4-hour chart.

Bearish Trend Confirmation: Any break below 0.8480 confirms an intraday bearish trend. A drop to 0.84425/0.8400/0.8378/0.8340/0.8300 is likely.

Near-Term Resistance:  The near -term resistance is around 0.8580. Any violation above will take the pair to 0.8615/ 0.8660/0.8765/0.8800.

Indicator Analysis (4-hour chart)

CCI (50): Bearish

Average Directional Movement Index:  Bearish

Trading Recommendation

It  is good to buy on dips around 0.8500 with SL around 0.8480  for a TP of 0.8605.