EURGBP Hits 2.5-Year Low on Pound Panic: Buy Dips to 0.8770, Target 0.8900 Amid UK Fiscal Fears

EURGBP hits a 2.5-year low on board-based Pound sterling.  As long as support 0.8750 holds, intraday bias is positive. Currently trading at 0.87536, it reached an intraday high of 0.87650.

Concerns over UK fiscal policy and inflation are pushing the Pound Sterling to multi-month lows versus main currencies amid investor fears in advance of the November 26th budget. Set to lower UK productivity growth predictions by 0.3 percentage points, the Office for Budget Responsibility would deepen a £20+ billion budget deficit and may balloon the overall deficit to £35 billion, driving Chancellor Rachel Reeves to consider major tax increases on the affluent or spending cuts as cautioned by the Institute for Fiscal Studies to prevent bigger damage to the economy. Compounding this, although the British Retail Consortium says that food inflation has slowed sharply—falling at its quickest rate in nearly five years—total CPI is still stubbornly high. though dovish data has raised hopes for a Bank of England rate cut in December to 3.8% and is predicted to reach 4%. With a 68% likelihood, declining Sterling's yield advantage further undermines its appeal.

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 0.8750 confirms an intraday bearish trend. A drop to 0.8700/0.8660/0.8630/0.8600/0.8560/0.8520/0.8480 is likely.

Near-Term Resistance:  The near -term resistance is around 0.8825. Any violation above will take the pair to 0.8850/0.8900.

Indicator Analysis (4-hour chart)

CCI (50): Bullish

Average Directional Movement Index:  Bullish

Trading Recommendation

It  is good to buy on dips around 0.8768-70 with SL around 0.8720 for a TP of 0.8850/0.8900.