EUR/GBP Broke Support After Rate Decisions
The Bank of England and the ECB made their expected decisions: BoE lowered the interest rate to 1%, and Jean Claude Trichet left the interest rate unchanged at 2%. The immediate result in the forex market was a big drop of EUR/GBP, currently trading at 0.8780.
When looking at the hourly forex charts for the EUR/GBP, this fall can be easily seen. It is already below the low value on February 2nd, and is at its lowest levels in two months.
Mervyn King’s BoE lowered the interest rate to another historic low – 1%. This was widely expected by traders. So the current trend of strengthening in the GBP/USD continued.
On the other hand, the European Central Bank also met expectations and left the rate at 2% – so also here the current trade of a weakening Euro continue. EUR/USD probably fell due to Russia’s downgrade. More details here.
Technical note: if this fall is persistent, EUR/GBP has lots to fall, and parity in EUR/GBP won’t be seen in a very long time.
The next stop for this currency pair is 0.8350, which was the peak on November 13th.
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I can see H and S patern on my 3 hour chart. If it is valid, 0.81-0.82 can be reached.
Marcin, 0.81 is quite a far target. Any timetable for this scenario?
Can't say. On my one year daily chart, 30MA touched 90MA for the first time since 03Nov08. It is also bearish on EUR/GBP. Looks challenging given the generally negative view of the pound.
I can't believe that the GBP has fallen so far. The end has to be in sight.
Casey, in the meantime it has dropped even more, diving below 0.87, before retracting.