EUR/GBP Signals & Technical Analysis
About the EUR/GBP (EURO & Great British Pound)
Breaking Down ‘EUR/GBP’The euro (€; EUR) is the official currency of 19 of the 28 member states of the European Union. The euro is the second largest and second most traded currency in the foreign exchange market after the United States dollar. The euro is divided into 100 cents.the Euro vs. the British Pound. This pair describes a cross among the two biggest economies in Europe, the Euro Zone and the United Kingdom. The pair is greatly less volatile than other Euro or Pound based crosses because of the economic closeness and relationship between the two. Changes in monetary policy between the Bank of England and the European Central Bank can make this pair extremely sensitive.
What Determines the EUR/GBP Exchange Rate?Several factors can impact the EUR/GBP rate valuation, including:ECB & BOE Monetary Policies: The European Central Bank and the Bank of England control the supply of money in the market, to keep the economy on track. A dovish policy, which is also known as expansionary policy, from either of the central banks, weakens the related currency. In contrast, a hawkish monetary policy (contractionary policy) strengthens the currency.Economic Events: The movement in the European and England economic events determine the exchange rates. Top of the line economic events includes GDP, Employment Change, Industrial Production, and Consumer Price Index. Better than forecast data increases the demand for related currency and impacts the value of either the Euro or the Great British Pound, causing fluctuations in the EUR/GBP exchange rate.
Currency CorrelationsCorrelation is merely a mutual relationship or connection between two or more things.Positive correlation – The positive relationship merely is when pairs move in tandem with each other.In the forex world, the GPB/SGD, GBP/AUD, and GBP/CAD currency pairs are positively correlated. It's because all these pairs have a Great British Pound in the numerator. So, any change in the Chunnel will be reflected in these pairs.Negative correlation – In contrast, a negative relationship is when forex pairs move in the opposite direction. For example, GPB/SGD, GBP/AUD, GBP GPB/CAD pairs share a negative correlation.The euro is one of the most important alternatives to the U.S. dollar among fiat currencies this is why there is often a positive link between the euro and gold: both assets are negatively correlated with the greenback.The United Kingdom is an oil producer Production. In 2008, the UK was the 14th largest oil and gas producer in the world (10th largest gas producer and 19th largest oil producer) In 2008, the combined production of oil and gas was 1 billion BOE (549 million barrels (87,300,000 m3) of oil and 68 billion cubic meters of gas).
EUR/GBP SpecificationsThe EUR/GBP is traded in amounts denominated in the US Dollar.Standard lot Size: 100,000 Mini lot size: 10,000 One pip in decimals 0.0001 Pip Value: $13.05
EUR/GBP - FAQs
The EUR/GBP currency pair can be a good trading opportunity, depending on the market conditions. This pair has historically been one of the most liquid and volatile forex pairs due to its proximity between two major global currencies. Traders may benefit from arbitrage opportunities as well as hedging and diversifying their portfolios in this cross-currency pair. However, it is important to thoroughly research the underlying economic conditions behind the euro (EUR) and British pound (GBP) before investing in this pairing, because changes in either of these factors could affect the performance of your investments significantly.
EUR/GBP is neither bullish nor bearish. The exchange rate between the Euro and the British Pound fluctuates regularly, depending on various economic factors. Factors such as employment, inflation and GDP can affect the value of both currencies relative to one another. Therefore, it's impossible to predict whether EUR/GBP will be bullish or bearish in a given time frame. Analysts instead monitor currency trends over time to determine if there is an overall trend in a particular direction.
The recent strength of the euro against the British pound has been on a roller coaster ride over the past few months. In February, EUR/GBP hit its highest level in five years as traders bet that a Brexit deal would be reached between Britain and the European Union. Since then, however, GBP has made some gains as risk sentiment improved and it was aided by a better-than-expected U.K. growth report for 2022, which reversed some of those losses towards the start of 2023.
1. Economic Growth - With both the European Union (EU) and the United Kingdom (UK) having a major influence on the global economy, economic growth can have an effect on EUR/GBP exchange rates. For example, if one of them had stronger growth compared to the other, that could lead to investors trading more of that particular currency compared to its counterpart leading to an increase in the exchange rate.
2. Interest Rates - Central banks set interest rates which affect how investors view each currency when creating strategies for forex trading. If central banks raise interest rates then this increases demand for their currency as it becomes more attractive for traders as they are able to receive higher returns on investments made using that currency, thus impacting EUR/GBP exchange rates significantly.
3. Political Uncertainty - The political landscape can have a strong influence on FX markets due to Brexit negotiations or other potential political events such as EU elections or changes in government policy abroad. This creates uncertainty amongst traders which can lead to large-scale fluctuations in exchange rates over relatively short periods of time.
4. Consumer Price Inflation – When inflation rises prices go up and this reduces purchasing power so there is less demand for commodities and currencies meaning that some may become devalued against others resulting in changes to EUR/GBP pairings being seen across international exchanges around the globe.