EUR/GBP Price Forecast – Why 0.8300 Is Crucial for a Downtrend?
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- EUR/GBP traders await preliminary readings of the Q4 Eurozone GDP.
- Political optimism in the UK boosts the UK currency, putting downside pressure on the EUR/GBP pair.
- EUR/GBP has closed a descending triangle pattern which is supporting the pair at 0.8300.
The EUR/GBP currency pair failed to stop its previous five-day declining rally. It remained depressed at around the 0.8320 level ahead of the key monetary policy meetings of the European Central Bank (ECB) and the Bank of England (BOE). Meanwhile, the political optimism in the UK boosts the UK currency, which was seen as another key factor that put downside pressure on the EUR/GBP currency pair. The cable pair picks up bids to retest intraday highs near 1.3415, up 0.11 percent on the day. Markets celebrate the USD’s decline after a lackluster start to a pivotal week.
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The economic event outlook
The EUR/GBP traders await preliminary readings of the Q4 Eurozone GDP, which is expected to rise to 4.7 percent YoY from 3.9 percent previously. While Germany’s first readings of the Harmonized Index of Consumer Prices (HICP) is expected to fall to -0.4 percent from +0.3 percent previously. At this time, the EUR/GBP currency pair is trading at 0.8318. It’s consolidating in the range between 0.8311 and 0.8324.
Aside from pre-data caution and central bank-related changes, the EUR/GBP is weighed down by expecting UK Prime Minister Boris Johnson to remain in office. That’s despite recent allegations about his COVID-linked performance.
On the same note, the Brexit Freedoms Bill, which was just passed by parliament and aims to reduce Brexit red tape, is expected to bring in 1 billion pounds ($1.3 billion). Furthermore, the pair benefited from the UK’s lowest COVID instances in seven weeks.
Hawkish remarks from ECB members underpin EUR/GBP
In contrast, recent hawkish statements from ECB members, as well as inflation fears, have kept buyers of the EUR/GBP pair positive. Following lower US Q4 Employment Cost Index readings on Friday, markets questioned the Fed’s aggressive action in March (ECI). Strong readings of the Fed’s favorite inflation indicator, the Core PCE Price Index, surged to 4.9 percent in December. The figure soared versus 4.8 percent predicted and 4.7 percent the month before, keeping the Fed hawks on the table.
Following the release of the US data, Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, stated that he expects the Fed to raise rates at its March meeting. The policymaker said that she “has to watch how the data plays out” while emphasizing the importance of incoming data. The theEUR/GBP traders may be entertained in the future by developments around Brexit and UK politics. However, following recent encouraging British figures, the Bank of England’s (BOE) rate hike fears will receive much attention.
EUR/GBP price forecast –Daily Technical Levels
Support Resistance
0.8324 0.8314
0.8329 0.8308
0.834 0.8297
Pivot Point: 0.8318
EUR/GBP price forecast – Upward trendline to support at 0.8370
The EUR/GBP is trading at 0.8310, gaining support at 0.8300. On the 2-hour timeframe, the triple bottom pattern extends such support and a breakout below this level exposes the EUR/GBP price towards 0.8275 and even lower towards the 0.8245 level.
The EUR/GBP has closed a descending triangle pattern which is supporting the pair at 0.8300. Typically, a symmetrical triangle pattern breaks on the lower side; therefore, the chances of a selling trend remain strong. The RSI and StochRSI are supporting a downtrend in the EUR/GBP pair; therefore, traders can take sell trades in EUR/GBP below the 0.8300 level to target the 0.8270 level.
On the bullish side, the 50 day EMA (exponential moving average) will be extending resistance at the 0.8335 level. A surge in EUR/GBP demand can take the pair further higher, and a breakout of 0.8335 opens further room for buying until the 0.8360 level. On Monday, let’s keep an eye on 0.8300 as we can capture selling opportunities under this level and vice versa. All the best, and stay tuned for more updates!
