EUR/USD Eyeing Former YTD Low, EUR/GBP Maintains Range, EU PMIs Mixed

[MongiIG]

EUR/USD, EUR/GBP ANALYSIS & NEWS:

• Mixed Eurozone PMIs as Supply Chain Disurptions Remain a Key Issue.
• EUR/USD edging towards prior YTD low.
• EUR/GBP Bounces Off Weekly Low as BoE Tightening Bets Recede.

PMI Recap: French October manufacturing PMI fell short of expectations at 53.5 vs 54 expected as supply chain issues remained a key feature once again. However, the services figure had been slightly better than consensus at 56.6 vs 55.5 expected with the composite reading matching consensus. Meanwhile, German PMIs saw a miss on the services front, with the manufacturing PMI coming ahead of expectations. Overall, Eurozone PMIs were slightly better than expected but not much in it.

MIXED EUROZONE PMIS AS SUPPLY CHAIN DISRUPTIONS REMAIN A KEY ISSUE

Source: DailyFX

EUR/USD: A softer USD sees the pair back within close proximity to the prior YTD low (1.1662), which on two occasions has curbed further upside. Therefore, the weekly close will be important for the pair as failure to make a close above may renew downside in the pair. However, should EUR/USD make a firm break, eyes will be on the psychological 1.1700 handle.

EUR/USD Chart: Daily Time Frame

Source: IG

EUR/GBP: Bank of England commentary continues to confuse markets over the timing of a potential rate rise. Overnight, Bank of England Chief Economist Pill noted that inflation could top 5% in the months ahead, however, the Chief Economist had more crucially urged caution over the exact timing of a rate hike having stated that there may be too much excitement in the focus on rates right now. In turn, market pricing for a 25bps rate rise at the November meeting has fallen from 95% probability earlier in the week to a 55% probability. As such, the cross has bounced back from its weekly lows and thus maintaining its 0.8420-60 range.

 

By Justin McQueen, Strategist, 22nd October 2021. DailyFX