Pound Plunges Below Key Support Level as Bond Market Worries Mount
The pound-to-euro exchange rate has broken below its key support level of 1.1647, sparking further losses in the coming hours and days.
This technical breakdown is happening at a time when bond markets are under pressure due to concerns over global inflation trends.
The GBP/EUR conversion fell by 0.20% during the midweek session, breaching the horizontal support zone that has held the pair since July.
Analysts note that this development is consistent with further weakness in the near term, as indicated by a weak RSI reading of 38.
The next area of support emerges at 1.1622, where the pullback meets the rising 100-day moving average, which could potentially provide some support to the pair.
However, this scenario is clouded by the current rise in funding costs due to surging bond yields, which may lead to higher taxes and mortgage rates, weighing on growth trends.