On Tuesday, the Euro fell hard against the British Pounds and moved even further back from the 6-month highs it has had in recent times. In the foreign exchange trading market, the EUR/GBP ended with a decline of 120 pips. This happened to be the biggest drop it has seen since the month of June.
The weakness as seen in euro came as a result of the recently released data showing strong growth within the UK economy. As a result, the pair fell sharply within only a few hours from 0.8850 to weekly lows at 0.8728 and finished the American session on the edge – around 0.8740 to be more specific.
Based on what is perceived by some currency analysts, a factor to take into consideration is whether the sharp fall in the EUR/GBP exchange rate is mainly as a result of a strong Cable or a weak euro. Quoting Fan Yang, a foreign exchange analyst with CMS Forex: “Looking at EUR/USD, EUR/JPY, and EUR/CAD for example confirms that the Euro may be topping across the board independent of the Pound. However, a true reversal has not been confirmed and EUR/GBP seems to be leading in the euro-reversal scenario. Still seeing other pairs pressure the euro will be confirming for the EUR/GBP to head to 0.8550 area”.