EURGBP breaks above 0.8800, hits four-week highs

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EUR/GBP bears return amid ECB and BoE’s contrasting bets, eyes on British data – Crypto News

Published

2 years ago

February 9, 2024

Dripp

The EUR/GBP currently trades at 0.8536, reflecting minor losses on Friday.
The pair will tally a seven-week losing streak.
Focus is set on next week’s British economic data including inflation and labor market reports.
A more hawkish stance of the BoE in relation to the ECB gives the Pound traction.

On Friday’s session, the EUR/GBP traded at 0.8536, posting mild losses amid contrasting monetary policy expectations from the European Central Bank (ECB) and the Bank of England (BoE) ahead of key economic figures of the British economy to be released next week. Meanwhile, the technical scenario remains bearish on the weekly and daily chart with bears gaining ground and tallying a seven-week selling spree.

Adding to that, despite the ECB pushing back against market easing expectations, a 55% chance of an interest rate cut in April is still predicted. On the other hand, markets are expecting a potential uptick in inflation in the UK, with the Consumer Price Index (CPI) expected to have risen by 4.1% YoY in January, prompting a greater likelihood of the BoE delaying cuts. The inflation report is due on Wednesday and on Tuesday, the UK will release labor market figures which will also shape the expectations of the next decisions. As for now, markets are seeing 100 bps of easing by the British bank, and 125 bps of easing from its European peer, and as long as investors bet on more easing by the ECB, the pair could continue falling.

EUR/GBP technical analysis

From a technical viewpoint, the daily and weekly chart’s negative direction of the Relative Strength Index (RSI) and the cross dwelling under its 20, 100, and 200-day Simple Moving Averages (SMAs) insinuate bearish dominance. This indicates that bearish momentum persists and selling pressure is primarily in control. The current seven-week losing streak of the pair also reinforces the negative outlook leaving the cross exposed for further downside.