EUR/GBP advances towards 0.8500 despite BoE hawkish tone in the last weeks
- EUR/GBP edges higher on the back of the EUR/USD, as the Sterling weakens against the greenback.
- Worse than expected, German Retail Sales, ignored by investors as the EUR/GBP kept trading north.
- EUR/GBP: From a technical perspective has a downward bias, as long as EUR/GBP remains below 0.8530.
The EUR/GBP climbs to two-week highs during the New York session, trading at 0.8495, up 0.53% at the time of writing. A mild risk-off market mood keeps risk-sensitive currencies like the British pound from appreciating, despite the hawkish rhetoric by important BoE members, as the BoE will unveil its monetary policy on Thursday of this week.
The European Central Bank (ECB) held its monetary policy meeting last week, where the bank kept unchanged interest rates. Also, despite rising inflationary pressures, with the Eurozone CPI expanding by 4.1%, it maintained its dovish stance, pushing backward investors’ intentions of a rate hike until late 2023.
Furthermore, the single currency is rising on the back of the EUR/USD, rising some 0.40%. Contrarily the British pound slides 0.20% against the greenback as both central banks head to their monetary policy meetings later in the week.
On the macroeconomic front, German Retail Sales for September on an annual basis collapsed, shrank 0.9% against a 1.8% increase foreseen by analysts. Despite the dismal report, the EUR/GBP continued its upward trend throughout the day.
EUR/GBP Price Forecast: Technical outlook
Daily chart
The EUR/GBP cross-currency pair has a downward bias, portrayed by the daily moving averages (DMA’s) located above the spot price. At press time, the pair is approaching the confluence of the 50 and the 100-DMA around 0.8520-30 area, which would oppose strong resistance for EUR buyers. However, the Relative Strength Index (RSI) at 53 aims higher, a bullish signal that diverges with price action.
To continue the downward trend, EUR/GBP sellers will need to hold the price below the September 16 low at 0.8500. In that outcome, EUR sellers could push the pair towards a renewed re-test of 0.8402, which is 2021 low.
For EUR/GBP buyers to confirm its upward bias, they will need a daily close above 0.8530. In that outcome, the following resistance would be the 200-DMA at 0.8588.