EUR/GBP Climbs as UK Bond Turmoil Weakens Pound: Bulls Eye 0.8750 Target

EURGBP trades higher as the Pound dropped below the 1.4000 level on renewed UK bond market concern. Intraday bias remains bullish as long as support at 0.8600 holds. It hits an intraday high of 0.87003 and is currently trading around 0.86844.

Fiscal worries about 2025 will strain the UK bond market, with long-dated gilt yields reaching their highest levels since 1998. Under Chancellor Rachel Reeves, limited fiscal headroom, rising debt service costs (105 billion expected this year), and government spending plans; global pressures include high US The turmoil is worsened by treasury yields, chronic inflation, and geopolitical tensions. With GBP/USD dipping under $1.22, the surge in yields has battered the British pound and prompted a rethinking of Bank of England rate cut predictions for 2025. Rising borrowing rates stress budgetary flexibility and highlight the fine equilibrium between PM Keir Starmer's government's difficulties in these market jitters. Developing investor confidence and promoting economic expansion.

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 0.86450 confirms an intraday bearish trend. A drop to 0.8600/0.8560/0.8520/0.8480 is likely.

Near-Term Resistance:  The near-term resistance is around 0.8700. Any violation above will take the pair to 0.8750/0.8800/0.8850.

Indicator Analysis (4-hour chart)

CCI (50): Bullish

Average Directional Movement Index:  Bullish

Trading Recommendation

It  is good to buy on dips around 0.86500 with SL around 0.8600 for a TP of 0.8750.