- The EUR/GBP stands at 0.8549 with mild losses after hitting fresh multi-month lows of 0.8535.
- Daily and four-hour chart indicators show that the bears are in command.
- Eurozone’s PMIs came in mixed, the UK indexes show resilience.
In Wednesday's session, the EUR/GBP pair was trading at 0.8549, reflecting a mild losses but recovered after hitting a low of 0.8535 earlier in the session, it lowest level since September. Ahead of Thursday’s European Central Bank (ECB) decision, markets digest European S&P PMIs from January to continue placing their bets on the easing cycle calendar.
In that sense, the Eurozone economies are recording mixed performances, with preliminary PMIs for January showcasing lower-than-predicted figures in services but better-than-expected in manufacturing. The UK economy, on the other hand, is showing resilience with stronger-than-expected preliminary January PMIs in both manufacturing and services sectors.
Regarding the European Central Bank (ECB), the markets anticipate the bank to hold steady at 4.0% on Thursday and start its easing cycle on Q2, with a total of 150 bps of rate cuts in 2024. The Bank of England (BOE) on the other hand anticipated to limit its rate cuts due to an improved UK growth outlook and persistently high underlying inflation and investors are betting on less easing than the ECB of 125 bps throughout 2024, which seems to be favouring the Pound over the Euro in the short term.
EUR/GBP levels to watch
From a daily chart perspective, the situation is tilted towards the sellers. The Relative Strength Index (RSI) is in the negative territory and is currently experiencing a downward slope, highlighting a bearish pressure. Simultaneously, the Moving Average Convergence Divergence (MACD) shows rising red bars, further reinforcing the dominant selling momentum. Additionally, the position of the cross below its 20, 100, and 200-day Simple Moving Averages (SMAs) is a strong testament to the selling forces controlling the broader outlook.
On the other hand, the shorter-term outlook gleaned from the four-hour chart presents a somewhat more balanced view. The indicators are seen to be somewhat flat but tilting slightly to the downside. The four-hour Relative Strength Index (RSI) shows a negative slope below the 50 mark while the Moving Average Convergence Divergence (MACD) on this time frame shows flat red bars, suggesting flat but steady bearish pressure.
EUR/GBP daily chart
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