“¢ ECB status-quo and absent dovish signals triggered the initial leg of an uptick.
“¢ Draghi’s inflation outlook provides an additional boost to the shared currency.
The EUR/GBP cross reversed an early European session dip and jumped to three-week tops, just above mid-0.8800s in the last hour.
The cross regained traction near the very important 200-day SMA after the ECB announced its latest monetary policy decision to leave interest rates unchanged, as was widely expected.
The shared currency got an additional boost after the ECB President Mario Draghi, at the post-meeting press conference, said that the underlying inflation is generally muted but is likely to pick up towards the end of the year.
Draghi further added that domestic cost pressures are strengthening and that wage increases are not temporary, reinforcing the outlook that inflation might continue to rise gradually over the medium-term and converge to the central bank’s target.
Meanwhile, the GBP bulls remained on the back-foot amid persistent uncertainties surrounding the Irish backstop and remained supportive of the pair’s positive momentum fifth trading session in the previous six.
Technical levels to watch
Immediate resistance is now pegged near the 0.8870-75 region, above which the cross is likely to aim towards surpassing the 0.8900 handle and test the 0.8915-20 supply zone. On the flip side, the 0.8835-30 region (200-DMA) now becomes an immediate strong support to defend, which if broken is likely to accelerate the slide towards challenging the 0.8800 round figure mark.
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