EUR/GBP Falling Ahead of the ECB and BoE Decisions

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EUR/GBP Falling Ahead of the ECB and BoE Decisions

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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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.