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The EUR/GBP pair has been growing for the third week in a row and reached three-month highs in the 0.8860 area yesterday.

The pound remains under pressure in anticipation of a recession in the British economy and against the backdrop of mass protests by public sector workers demanding higher wages to maintain living standards amid record inflation. Q3 gross domestic product (GDP) of the United Kingdom fell by 0.3%, which was worse than the calculations of experts who expected a decline of 0.2%, and the figure increased by 1.9% YoY, not reaching the projected 2.4%. Starting the next quarter, the market expects a decline in macroeconomic indicators, which may last for several years, according to the Bank of England.

European investors, on the contrary, are beginning to feel optimistic about the economic prospects, which, first of all, concerns the German economy, which is the leader in the EU. Against the backdrop of measures to support businesses and households by the German government and a mild winter that excludes shortages of gas and fuel, business sentiment and the consumer climate in the country continue to improve: the corresponding index from the Institute for Economic Research (IFO) rose to 88.0 points in December, and the GfK index Group corrected to –37.8 points in January statistics. At the same time, European Central Bank (ECB) officials expect that the recession in the EU will be less severe and announce a further tightening of monetary policy, which provides additional support for the euro. True, today, the growth of the EUR/GBP pair slowed down against the backdrop of the publication of poor European data on borrowings: in November, the volume of loans to enterprises grew by 8.4% instead of the expected 8.6%, and to the private sector – by 4.1% instead of 4.3%, however, the potential for a downward correction is seen as limited, as the overall fundamental background remains favorable for the European currency.

Technically, the price is testing 0.8850 (Murrey level [+1/8]), the breakout of which will give the prospect of further growth to 0.8911 (Murrey level [+2/8]), 0.9033 (Murrey level [6/8], W1). After the breakdown of 0.8789 (Murrey level [8/8]), the price will be able to roll back to the middle line of Bollinger bands 0.8685, but it is unlikely to change the current uptrend.

Technical indicators point to the continuation of the uptrend: Bollinger bands are reversing upwards, the MACD histogram is increasing in the positive zone, and Stochastic is horizontal near the overbought zone.

Resistance levels: 0.8850, 0.8911, 0.9033. | Support levels: 0.8789, 0.8685, 0.8600.