- EUR/GBP: headed to below 0.86 the figure with eyes to 0.8526?
- EUR/GBP: technically suffering and fundamentally, BoE rate hike prospects weigh.
EUR/GBP is bid on the short term sticks but it has been carving out the downside and is trading below a horizontal daily resistance and a descending resistance line from the 6th March highs, while below the 23rd Jan ascending support line. Currently, EUR/GBP is trading at 0.8648, up 0.16% on the day, having posted a daily high at 0.8652 and low at 0.8620.
EUR/GBP dropped below the 0.87 handle and made a fresh low of 0.8620 on weakness in the dollar and a pound that shot through 24th Jan previous highs of 1.4345, making a high of 1.4376 today.
There has been some major selling from that level which has given some life to the cross, recovering back to the hourly 50 sma at 0.8643 making a high of a few pips higher at 0.8648. However, the broader tone of the pound is firm, with GBPUSD effectively trading around the Jan high still and the cross still remains buried under key technical resistance levels with eyes on 0.8588 to the downside.
BoE to hike in May?
Analysts at Scotiabank noted that short sterling contracts rallied this morning and the GBP slipped off the intraday high but argue that UK rate hike probabilities for May remain elevated (85%) and the pound itself remains firm despite easing back from intraday highs near 1.4380.
Analysts at Commerzbank explained that EUR/GBP last week broke down from the base of its range and they continue to target 0.8526, the 78.6% retracement of the move from 201:
"En route is a support line at 0.8588. Near term it remains offered below 0.8800/0.8810. Initial resistance is the 0.8705 near-term downtrend. Above .8810 would allow for a recovery to the .8969 recent high and the .9034 October 2017 high."
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