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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

EUR/USD and GBP/USD appreciate while EUR/GBP stalls

Outlook on EUR/USD, EUR/GBP and GBP/USD amid record UK public sector deficit.

EUR/USD continues its advance

EUR/USD’s advance from its early-January low at $1.0484 low so far made a new nine-month high at $1.0926 amid hawkish comments by European Central Bank (ECB) officials over the weekend.

The currency pair remains on track to reach the late-April 2022 high and the 50% retracement of the 2021 to 2022 descent at $1.0936 to $1.094 over the coming days while it stays above the January uptrend line and 12 January low at $1.0867 on a daily chart closing basis. Above $1.094 beckons the psychological $1.10 mark. Support remains to be seen at last week’s $1.0766 low. While above it, and the mid- to late-December highs at $1.0736 to $1.0715, the medium-term uptrends remain intact. Further support can be found around the $1.0663 to $1.0658 16 to 28 December highs.

EUR/USD chart Source: IT-Finance.com
EUR/USD chart Source: IT-Finance.com

EUR/GBP little changed on record UK budget gap high

EUR/GBP slid back from Monday’s £0.8815 high and now trades below the £0.88 mark as the UK’s public sector net borrowing excluding public sector banks hit the highest December monthly figure since records began in 1993, mainly because of the government’s energy support scheme and an increase in debt interest payments.

The cross thus so far fell short of the £0.8828 November peak as well as the £0.8834 22 December high, above which sits more significant resistance between the December and current January highs at £0.8877 to £0.8897. Support remains to be seen along the 55-day simple moving average at £0.8733 and last week’s low at £0.8722. If slipped through, the 23 November high and 19 December low at £0.8701 to £0.8691 could once again be reached. Further down sits the 28 November high at £0.8676.

EUR/GBP chart Source: IT-Finance.com
EUR/GBP chart Source: IT-Finance.com

GBP/USD grapples with its $1.2446 December peak

The record high in UK public sector net borrowing (ex banks) hasn’t had much impact on the GBP/USD cross as it continues to grapple with its December peak at $1.2446. UK public sector net borrowing excluding public sector banks came in at a record high of £27.4 billion in December 2022, much higher than market forecasts of £17.75 billion and a gap of £17.6 billion in November.

The currency pair’s September advance from its $1.035 all-time low over the past week or so struggled to overcome its December high at $1.2446 which is not to say that this won’t happen in the near future, provided that the January support line at $1.2374 continues to underpin. Further minor support lies at the 16 January high at $1.2289. A rise and daily chart close above Monday’s $1.2448 high would engage the minor psychological $1.25 mark above which the 7 June 2022 high sits at $1.2599.

GBP/USD chart Source: IT-Finance.com
GBP/USD chart Source: IT-Finance.com

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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