EUR/GBP tests 0.8700 following hawkish remarks by ECB’s Holzmann

• The Euro bounces up to retest 0.8700 buoyed by ECB´s Holzmann's comments.
• Holzmann affirms that there is no guarantee for rate cuts in 2024.
• The absence of Eurozone data increases the impact of ECB rhetoric.

The Euro maintains its bullish tone against the British Pound on Thursday, with the pair bouncing strongly at 0.8670 to test one-month highs at 0.8700.

The pair has been supported by ECB member and Governor of the Austrian National Bank, who has played down speculation about rate cuts in 2024, providing a fresh impulse to the Euro.

Apart from that, the positive risk sentiment seems to be favouring the Euro rather than the Pound. The common currency is surfing on the Santa Claus rally, favoured by the absence of key Eurozone data to negate the hawkish comments by ECB policymakers.

From a technical perspective, Tuesday´s bullish engulfing candle has confirmed the positive trend, giving extra hopes for buyers, although the 0.8700 seems to be a challenging level, as shown by Wednesday´s reversal.

A clear break of the 0.8700 level would increase bullish pressure towards the November 22 and 23 highs, at 0.8725 and November’s peak, at 0.8765.

On the downside, support levels are 0.8645 and 0.8600.
 

Technical levels to watch