EUR/GBP refreshes session lows after ECB downgrades growth and inflation forecasts

   “¢   Dovish ECB shifts prompted some aggressive selling around the shared currency.
   “¢   A downward revision of the ECB’s growth/inflation projections adds to the selling bias.
   “¢   Brexit uncertainties continue to weigh on the British Pound and helped limit losses.

The EUR/GBP cross extended its post-EC retracement slide from an intraday high level of 0.8625 and refreshed session lows during the post-meeting press conference.

The shared currency weakened across the board after the ECB surprised market participants by announcing a new series of targeted longer-term loans – TLTROs and changed its interest rate guidance, now sees rates to remain on hold at least through 2019.

Adding to this, the ECB also lowered its economic growth forecast for 2019/2020 and inflation projections through 2021, which exerted some additional downward pressure on the common currency and collaborated to the pair’s intraday slide of around 50-pips.  

The downside, however, remained cushioned on the back of the prevalent selling bias surrounding the British Pound amid reemerging Brexit uncertainties and growing pessimism over the possibilities of a breakthrough in Brexit talks this week.  

Meanwhile, the cross remains well within a familiar trading range held since the beginning of this week, clearly indicating indecision among traders. Hence, it would be prudent to wait for a sustained break in either direction before positioning for the near-term trajectory.

Technical levels to watch