The Bank of England and the European Central Bank both hiked rates to 4% and 2.5% (Deposit Rate) as expected. In fact, there should have been little upheaval in the single currencies with Governor Baileys and President Lagarde’s speech and Q&A unable to upset the markets.
We witnessed some choppy intraday trading in EURGBP after the cross posted a 5-month high of 0.8955, a low of 1.1167 for GBPEUR.
From a technical standpoint, using Cypher formation studies, EURGBP is highlighting that a top could be in place.
Let us look at the charts with an emphasis on the single currency baskets first.
EURO basket daily
The Euro completed a bearish cypher formation known as a Butterfly pattern back on the 12 th of January 2023. We have seen sideways movement since that point, with the markets consolidating before data releases.
EURO basket 4-hour
Breaking down into shorter time frames, the scope for the upside is limited.
GBP basket 8-hour
The single currency Sterling chart highlights a completed Butterfly formation with strong buying witnessed this morning.
GBP basket Daily
The upside potential is ample before we see any relevant resistance barriers.
Correlation
Using correlation, we have a downside bias in the Euro, and an upside bias in GBP. Bearish (negative) on EURGBP. Bullish (positive) on GBPEUR
EUR/GBP outlook
EUR/GBP 8-hour
We have competed a bearish (negative) Butterfly formation at 0.8955.
To the downside we have support at:
-
0.8828 (resistance in GBPEUR at 1.1327).
-
0.8765-50 (resistance in GBPEUR at 1.1400).
-
0.8620 (resistance in GBPEUR at 1.1600).
Using the Elliott Wave theory (5-wave pattern) this looks likely to be pauses in the selloff.
Big Picture Analysis
EUR/GBP daily
Although this offers an immediate downside bias for EURGBP, and we look for a sustained move down to 0.8620 support, this could be a corrective cycle before buyers return and push the pair towards 0.9200 (GBPCHF 1.0869) before completing a bearish (negative) Bat formation.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD stabilizes above 1.0750, looks to post modest weekly gains
Following the sharp decline witnessed in the European session, EUR/USD has managed to recover modestly and seems to have stabilized above 1.0750 amid an improvement seen in market mood. The pair remains on track to end the week modestly higher.
GBP/USD holds above 1.2200 heading into the weekend
GBP/USD retraced a small part of its daily decline in the American session after having tested 1.2200 earlier in the day. The US Dollar has lost some strength with Wall Street's main indexes rebounding from opening lows, allowing the pair to limit its losses.
Gold retreats after facing resistance at $2,000
Gold price climbed above $2,000 in the early American session but reversed its direction. With the benchmark 10-year US Treasury bond yield recovering from daily lows after Wall Street's opening bell, XAU/USD struggles to keep its footing and trades at around $1,990.
Breaking: Binance suspends spot trading, citing issues
Binance, one of the world's largest cryptocurrency exchanges by trading volume, announced that it halted spot trading. The announcement from the exchange caused BTC and ETH to drop by nearly 3% and 4%.
Deutsche Bank Stock Forecast: DB shares drop 6% at open following bond sell-off
Deutsche Bank (DB) is the newest bank that has the market worried. Shares opened down more than 6% on Friday and at the time of writing are trading off -6.8% at $8.99.