Our EURGBP forecast notes that the pair has rebounded strongly and is now pressuring dynamic resistance. It remains to be seen how the price will react around the current upside obstacle. An upside breakout may signal more gains.
Still, technically, we cannot exclude a temporary decline in the short term. There is a chance the pair could slip lower but that could serve to attract more buyers and with it more bullish energy.
The British Pound lost significant ground versus its rivals after the BoE took a markedly dovish stance at its meeting last week. Mirroring the US Fed, Bank of England governor Andrew Bailey says inflation pressures are “transient” and as such the Monetary Policy Committee remains relaxed about price levels.
Economic calendar round-up
The German Preliminary CPI was reported in line with expectations at 0.4% versus 0.5% in the previous reporting period. Tomorrow, the UK will publish its Final GDP, Current Account, Revised Business Investment.
On the other hand, the eurozone CPI Flash Estimate, Core CPI Flash Estimate, and the German Unemployment Change could bring life to this pair and the appetites of forex trading desks. There is a strong chance that the pair will increase if the UK’s data turns out to be disappointing and the eurozone figures come in better than expected.
EURGBP forecast: technical analysis – decline before the breakout
EUR/GBP outlook sees the pair pressuring the downtrend line. So far it has registered a number of false breakouts, so it could slip lower before making a definitive upside breakout. It’s hard to believe that it will make a valid breakout after the current growth.
We will need to see a temporary decline towards the weekly pivot point 0.8576 ahead of a new breakout attempt. Technically, a valid breakout from the current pattern, above the downtrend line could really announce an upside continuation.
EUR/GBP failed to reach the warning line (wl1) of the ascending pitchfork, so it could come back to retest the 150% Fibonacci line.
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