The Euro finally traded higher against the British pound, and cleared an important resistance zone during the speech of the Bank of England’s Governor Mark Carney. The most important point to note from his speech was the stress regarding the dependency of the first rate hike and incoming data. He stated that the rate hike would be dependent on data. Moreover, he mentioned that the rise in the interest rates will be gradual. This did not go down well with the British pound buyers, as it lost ground against the Euro and the US dollar.
The EURGBP was the most interesting one, as there was a triangle forming in the hourly timeframe. The pair breached the same and traded higher. This particular break was significant as the up-move in the pair was sharp taking it all the way back to the recent swing high of 0.8024. The pair also managed to clear the 200 and 100 hourly simple moving average. The pair might consolidate the recent gains before moving higher again. Initial support can be seen around the 38.2% fib retracement level of the last run from the 0.7962 low to 0.8024 high. Any further losses should find buyers around the 50% fib level.
Alternatively, if the pair continues to trade higher from the current levels, then it might challenge the 0.8050 resistance area. More gains above the mentioned level would be largely dependent on the strength of the Euro, as it has been struggling to gain ground in the recent days.
The RSI is also around the extreme levels, which means there might be a pullback soon. However, the triangle break was crucial, and any dips from the current levels could be seen as a nice buying opportunity.
Posted By Simon Ji of IKOFX
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