EUR/GBP has returned to 0.8700 In a volatile trading session of 2023 

Highlights:

• The Euro has risen to 0.8660 and is now testing resistance at 0.8700.
• Meanwhile, the Pound is weakening across the board on a day with light trading.
• EUR/GBP is continuing its bullish trend from early December lows.

The Euro rose again to 0.8715, approaching a one-month high, after bouncing up from 0.8660 and returning to levels near 0.8700. The pair is taking advantage of recent GBP weakness in the last trading session of the year.

In the UK, housing prices remained flat in December, as expected, following a 0.2% increase in the previous month. Year on year, prices declined at a 1.8% pace, which was worse than expectations of a 1.4% decline and followed a 2% depreciation in October.

Preliminary data for the Euro Area showed that consumer prices in Spain remained unchanged in December, while growing at a 3.3% level on the year, the same as the previous month. This indicates that inflationary pressures continue to be high in some countries and supports the ECB’s ‘higher for longer’ stance.

The technical analysis reveals that bulls are in control, with the pair printing higher highs and higher lows since early December. However, the pair needs to confirm above the 0.8700 level to 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 at 0.8645 and 0.8600.