EUR/GBP took a hit on Tuesday, dropping by a third of a percent to its lowest level in nine months as the European Union elections caused a stir in the Eurozone markets. Meanwhile, UK labor data disappointed with an increase in unemployment claims, prompting Sterling traders to focus on the upcoming UK Gross Domestic Product (GDP) report.
The EU Parliamentary elections saw a rise in support for center-right to far-right political parties, leading to market instability in Europe. French President Macron witnessed a decline in voter support, prompting the announcement of a snap election in France on June 30 and July 7.
Despite the European Central Bank’s recent rate cut, policymakers are hesitant to implement another cut unless economic data worsens. Several ECB officials are scheduled to speak throughout the week.
UK labor figures missed expectations, with the 3-month ILO Unemployment Rate rising to 4.4% in April and May’s Claimant Count Change jumping to 50.4K. This surge in unemployment claims is the largest since March 2021.
GBP traders are now awaiting the release of the UK GDP report, which is projected to remain unchanged at 0.0% compared to the previous month.
EUR/GBP’s technical outlook shows a decline to multi-month lows, with the pair struggling to surpass the 0.8460 level. The 200-day Exponential Moving Average (EMA) is turning bearish, indicating potential further downside for EUR/GBP. Despite recent bearish pressure, any bullish recoveries may face resistance above the 0.8500 handle.
In conclusion, EUR/GBP’s recent decline is influenced by the EU elections and disappointing UK labor data. Traders are closely monitoring economic indicators and technical levels for potential market movements in the coming days.