EUR/GBP Slips to 0.8336 – Downward Channel in Play
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- EUR/GBP pair’s gains could be temporary, as increased bets for more BoE interest rate hikes strengthen the UK pound.
- European Commission President Ursula von said that if Russia invades Ukraine, it will be shut off from international financial markets.
- EUR/GBP is trading at 0.8334, retesting the previously violated double top resistance at 0.8630.
Today, in the early European session, the EUR/GBP currency pair managed to stop its early-day downward rally. The pair hit the intra-day high just above the 0.8345 level. Following a test of Monday’s low at 0.8325, the EUR/GBP pair has seen substantial buying. However, the reason for its upward tendency could be tied to the lack of progress in talks to settle concerns with the Northern Ireland protocol of the Brexit agreement. It held back bullish traders from placing aggressive bets on the pound and ultimately supported the EUR/GBP pair.
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According to Bloomberg, policymakers are edging towards a rate hike before the end of 2022. That’s to prevent more persistent than expected inflationary pressures and a better inflation outlook. This news boosted the EUR/GBP pair prices even more.
In contrast, the EUR/GBP pair’s gains could be temporary, as increased bets for more Bank of England interest rate hikes strengthen the UK pound. The GBP demand was bolstered by last week’s mainly bullish UK macro data.
The economic event outlook
At this time, the EUR/GBP currency pair is trading at 0.8345 and consolidating in the range between 0.8324 and 0.8350. The weekend report that an explosion had been heard in the midst of the rebel-held city of Donetsk in eastern Ukraine sent global markets into a tumble. However, after AFP reported that French President Emanuel Macron suggested a conference with US Vice President Joe Biden and his Russian counterpart Vladimir Putin, sentiment immediately reversed.
Both parties have approved the “principle” of a summit, according to the report. “President Biden accepted in principle a meeting with President Putin following that engagement, again, if an invasion hasn’t happened,” the White House said in response to the news. As a result, the S&P 500 futures have reversed a 0.50 percent early Asian loss, but the US Dollar Index (DXY) remains under pressure at around 95.80 at press time, indicating a risk-on sentiment.
President Ursula Remarks on Geopolitical Tensions
European Commission President Ursula von der Leyen said on Sunday that if Russia invades Ukraine, it will be shut off from international financial markets. Moreover, it will result in denied access to vital export items. “We realize we must always offer Russia a chance to return to diplomacy and the negotiating table. The move to sanctions is so massive and consequential,” von der Leyen continued. So far, this news has had no significant influence on the EUR currency.
The EUR/GBP currency pair was aided by the lack of progress in talks to settle issues with the Brexit agreement’s Northern Ireland protocol, which prevented bullish traders from putting aggressive wagers on the pound. According to Bloomberg, policymakers are pushing towards a rate hike before the end of 2022 to prevent more persistent than expected inflationary pressures and to improve the outlook for inflation. This adds to the EUR/GBP currency pair’s positive impact.
Looking ahead, the preliminary readings of February’s PMI statistics for Germany and the Eurozone will be closely watched by EUR/GBP traders in the upcoming days. A speech by Fed Governor Michelle W. “Miki” Bowman will also be crucial. In the meantime, the meeting between US Secretary of State Antony Blinken and Russian Foreign Minister Sergei Lavrov is crucial for a new start.
EUR/GBP price forecast –Daily Technical Levels
Support Resistance
0.8361 0.8381
0.8349 0.8389
0.8342 0.8401
Pivot Point: 0.8369
EUR/GBP price forecast – Triple bottom to support at 0.8300
The EUR/GBP is trading at 0.8334, retesting the previously violated double top resistance at 0.8630 on the 4-hour chart. This level is now acting as a support for EUR/GBP. In the 4-hour timeframe, the EUR/GBP currency pair has completed the 61.8% Fibonacci retracement. The closing of candles above the 61.8% fib level supports the chances of a bullish trend in the EUR/GBP currency.
On the 4-hourly timeframe, the EUR/GBP pair is trading below the 50 EMA (exponential moving average), extended by a solid resistance at the 0.8400 level. On the other hand, the cross-currency pair is gaining strong support at the 0.8364 level. A surge in selling pressure can trigger a bearish breakout below the 0.8364 level, exposing the currency pair towards the next support level of the 0.8322 level.
Looking at the leading technical indicators, the RSI and MSCD stay under 50 and 0, respectively. This indicates that the currency pair is still trading with a bearish bias. Therefore, the violation of 0.8364 helps traders capture a sell trade.
All the best, and stay tuned for more updates!
