The European Central Bank and the Bank of England both held rates and maintained their current stance on monetary policy. We had more insight from the ECB after its press conference, whereas we will need BoE’s inflation report next week, and the meeting minutes in the following week to get a better gauge its time-line on a rate hike. Let’s take a look at the EUR/GBP and what its reaction is telling us.
The EUR/GBP has been consolidating since July after falling throughout 2014. Price failed to rally from the middle of this consolidation range after the central bank events. This showed lack of bullish strength and suggests bearish continuation. A break below 0.7915 would be the next signal for the bearish outlook which has the 0.7880 low in sight for the near-term, with downside risk toward the 0.7764 support pivot and 2012 low in the short to medium term.
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