The EUR/GBP has been trading in a consolidation pattern since September. Now, as we approach decisions from the ECB and BoE regarding monetary policy, the market is fading this pair, poised for bearish continuation. Let’s take a look at the EUR/GBP chart.
The EUR/GBP is heading towards the lows of its multi-month consolidation. If the ECB is still on the path for QE, the lows 0.78 and 0.7766 are vulnerable. The BoE would help EUR/GBP fall further if it becomes more hawkish, and affirms a rate hike in Q2 of 2015, or earlier. Now, if the ECB suggests that it might not need QE, the EUR/GBP might be supported, especially if the BoE becomes more dovish, for example by unanimously voting for holding rates instead of having the 2 dissents to raise rates.
0.79 will be key. Ability to hold below it keeps pressure on the 0.78 and 0.7766 lows with risk of falling towards the 2008-lows in the 0.7690-0.77 area. A break above 0.79 will call for more consolidation, and a possible formation of a multi-month price bottom.
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