EURGBP Analysis | Free Forex Signals Daily

EURGBP update, U.K. Uncertainty Could Push the Pair Higher

EURGBP, Daily

Eurozone Q4 GDP showed mild growth of around 0.3% Q/Q. Weak EU PMIs are putting some pressure on the EUR, while discouraging data is expected to continue from the Eurozone, which will keep ECB dovishness intact. The fact that the ECB is ready “to do more” to bring inflation back to target, means that traders will be seeking clues during the next monetary policy meeting in March. The question remains what exactly Draghi still has up his sleeve.

Yesterday, the GBP saw the biggest one day loss in 6 years on fears that the U.K. will leave the E.U. With uncertainty in the backdrop, we expect that further pressure on the GBP will prevail in the coming months before the June 23 referendum.

Technically, the short term EURGBP price trades above the tentative downward sloping trend-line and above its short term moving average (10 period). My conclusion is that the underlying trend is up, and I remain with long positions as long as price can hold above the 0.7700 area, for initial targets within the 0.7900 – 0.8000 zones.

Feb 22 EURGBP SRL

Janne Muta

Chief Market Analyst

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I wrote in yesterday’s analysis on EURGBP: At the time of writing the pair is trading at the supporting end of the wedge. This market is still in a sell the rallies mode with the nearest resistance levels at 0.7093 and 0.7105. The nearest 240 min support is at 0.7060 while the next daily support can be found at 0.7027.

Those that have been to my webinars knew exactly how to get into a short trade and had a low risk trade opportunity as EURGBP hit the 0.7093 resistance identified in the report. The pair hit the first support yesterday and after some consolidation has now resumed the downward momentum. Those that used the position management technique they have learned in the webinars have now a profitable and risk free trade. You are most welcome to join me to the webinars and learn how to find and trade these opportunities. Register now. It’s free.

Today is a so called super Thursday, a day when Bank of England publishes not only the interest rates decision but also the quarterly inflation report. No changes are anticipated from the BoE. As Governor Carney has pointed out on at least two occasions since mid-summer, the possibility of a rate hike will be in “sharper relief” at the end of the year, so the implicit tightening bias remains in place. Still, the minutes will be of considerable interest, along with the Quarterly Inflation Report, which will bring new projections on inflation and growth. We expect the minutes to reveal a 8-1 vote to keep the repo rate unchanged at 0.5%, with the lone hawk McCafferty maintaining his dissent for a quarter point hike for a fourth straight month.

The Inflation Report should reveal downward nudges to both inflation and growth forecasts in the nearer-term part of the forecast horizon following disappointing prelim Q3 GDP growth and an unexpected return to negative inflation readings in September.