EUR/GBP Rejects Key Resistance Ahead of the ECB


EUR/GBP Analysis

The pair once again falters at the pivotal resistance confluence provided by the descending trendline from the November peak and the 38.2% Fibonacci of the last leg down. The rejection sends it lower this week, breaching another critical technical level – the EMA200. This preserves risk for new 2024 lows (0.8496-1), but sustained weakness below may prove hard.

The monetary policy differential is unfavorable, as the European Central Bank appears closer to a pivot. Eurozone inflation returned back to 2.4% y/y in March according to last week's preliminary data and multiple policymakers have pointed to summer rate cuts. Inflation in the UK has also come down substantially, but at 3.4% y/y in February, it is still far from the 2% and the Bank of England likely has more work to do.

On the other hand, the BoE has hinted at peak rates and given economic weakness it has reasons to want to lower rates. Despite stressing that officials are not there yet, Governor Bailey embraced market pricing for 2-3 cuts this year in a Bloomberg interview after the last policy meeting. [1]

As such, the two central banks may not be that far apart. This could contain the fall along with an RSI that moves towards oversold level and give the common currency another chance to push beyond the 38.2% Fibonacci.

The trajectory of the pair will be determined Thursday's policy decision by the ECB. A change in rates does not seem likely and all eyes will be on President Lagrade's press conference. She has generally been on the conservative side, but if officials intend to cut, she may need to start laying the groundwork. Any hints towards that could weaken the Euro, but if she sounds hawkish, the pair should rise.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.



Retrieved 25 May 2024

${} / ${getInstrumentData.ticker} /

Exchange: ${}

${} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.