EUR/GBP Price Forecast – Why 0.8460 Could Halt Uptrend?
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- EUR/GBP turned bullish around the 0.8440 level as higher UK CPI advocates a fourth interest rate hike in a row.
- Financial Times reported that Russia was no longer insisting on the “denazification” of Ukraine during ceasefire talks.
- Bank of England increased interest rates to 0.75 percent in order to combat rising inflation.
During the early Asian session, the EUR/GBP currency pair failed to extend its previous-day upward rally. However, the EUR/GBP price forecast turned bullish around the 0.8440 level as higher UK CPI advocates a fourth interest rate hike in a row. The pound has received substantial bids as investors’ risk appetite improves. Moreover, the risk-perceived assets acquire more demand. The latest prospects of significant progress in the development of peace talks between Russia and Ukraine boosted market trade sentiment.
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Geopolitical Tension Eases amid Russia Ukraine Ceasefire
Wall Street, on the other hand, was given a ray of hope when the Financial Times reported that Russia was no longer insisting on the “denazification” of Ukraine during ceasefire talks. Furthermore, the article implies that if Kyiv abandons its Nato ambitions, Russia will allow it to join the EU.
The positive momentum tends to benefit the Euro currency. Hence, it was regarded as one of the key factors that kept the EUR/GBP currency pair from losing any more ground. At this time, the EUR/GBP currency pair is trading at 0.8392 and consolidating between 0.8384 and 0.8395.
Russia and Ukraine Peace Talks
The market’s trading sentiment has been flashing green since the day started. It’s mostly because the investors cheered the prospects of positive progress in developing peace talks between Russia and Ukraine. Late on Wall Street, the Nasdaq, S&P 500, and Dow rallied as big tech names backed the Nasdaq, S&P 500, and Dow.
Simultaneously, investors celebrated the potential for positive progress in developing the Russia-Ukraine peace talks. As a result, the pound has drawn large bids as investors’ risk appetite improves and risk-perceived assets become more appealing.
BoE Rate Hike Pressures on EUR/GBP
The Bank of England (BoE) is widely regarded as one of the world’s most effective central banks. It serves as the government’s bank and the last resort lender. It is in charge of issuing currency and implementing monetary policy (including interest rates). Since March 16, 2020, Andrew Bailey has served as Governor of the Bank of England. Her Majesty the Queen has given her approval to the appointment. He is widely and profoundly respected for his leadership in managing the financial crisis, developing new regulatory frameworks, and encouraging financial innovation to better serve UK households and businesses.
The Bank of England increased interest rates to 0.75 percent in order to combat rising inflation. The central bank raised its benchmark rates by 25 basis points three times in a row (bps). Hence, it has weighed on EUR/GBP pair, however, the market has already priced in.
UK Inflation Figures in Play
The Office for National Statistics in the United Kingdom released the annual Consumer Price Index (CPI) at 6.2 percent. It’s significantly higher than market expectations of 5.9 percent and 5.5 percent, respectively.
Because of a higher-than-expected print of UK inflation, the Bank of England (BOE) may be forced to raise interest rates again in May. Thus, the British pound’s relative gains were aided by a hawkish assessment of the Bank of England’s decision last week, as well as the release of positive UK CPI data.
On the other hand, the shared currency benefited from slight weakness in the US dollar, providing support to the EUR/GBP cross.
UK GBP in Highlights –EUR/GBP Price Forecast
GDP (Gross Domestic Product) is the total market value of a country’s final goods and services. It is a broad measure of market activity because it indicates how quickly or slowly a country’s economy is growing or contracting. Investors will pay close attention to the quarterly and annual UK Gross Domestic Product (GDP) data, which will be revealed on Thursday, and the US NFP. Quarterly and annual GDP growth rates are 1% and 6.5%, respectively.
EUR/GBP Price Forecast – Daily Technical Levels
S3 0.83715
S2 0.83805
S1 0.83852
Pivot Point 0.83895
R1 0.83942
R2 0.83985
R3 0.84075
EUR/GBP Price Forecast – Double Top 0.8455 to Extend Headwind
The EUR/GBP price forecast remains bullish as it’s heading north, traveling over 60 pips to trade at the 0.8449 level. On the bullish side, the EUR/GBP pair may find a strong resistance near the 0.8456 level, which is extended by the double top pattern.
The cross-currency pair has formed a bullish engulfing candlestick pattern that’s likely to extend the uptrend in the market. A surge in Euro demand can slice through the 0.8456 resistance level and drive a further uptrend until 0.8478. If the market continues with an uptrend, the next EUR/GBP target is likely to be 0.8494.
On the lower side, the EUR/GBP’s immediate support may prevail at the 0.84172 level, which is being extended by resistance to become a support area. A breakout of the 0.8417 level exposes the EUR/GBP price towards the next support level of the 0.8386 level. If the downtrend continues, the EUR/GBP price could fall as low as 0.8360.
Since the market is in a buy zone, the odds of a bullish trend continuation remain strong, especially above the support level of 0.84172. The 50-day exponential moving average is supporting a bullish bias for EUR/GBP. However, the major point of concern should be the doubled top level of 0.84569. The EUR/GBP may struggle below this level, and failure to violate this level could trigger a bearish correction. Hence, consider selling below the 0.84569 level and buying above the same upon a bullish breakout. All the best, and stay tuned for more updates!
