EUR/GBP Price Analysis: Bulls get rejected at the 20-day SMA following ECB decision

EUR/GBP peaked at a daily high of 0.8600 and then retreated below 0.8550.
As expected, ECB hikes rates by 0.25% but didn’t commit to a hike in September.
The 2-year German yield fell more than 1% to 3.23%.

Patricio Martín FXStreet

On Thursday, the Euro weakened against most of its rivals, including the USD, GBP, AUD, and JPY, following the European Central Bank's (ECB) decision to hike rates by 0.25% as investors perceived a dovish tone in Christine Lagarde’s presser making German yields decrease.

Like Federal Reserve (Fed) Chair Jerome Powell on Wednesday, Christine Lagarde confirmed she was “open-minded” towards the September meeting as the decision will depend on the economic and inflation outlook. In addition, she stated that the Council will not engage in forward guidance and will have the option of either increasing or maintaining interest rates.

On the other hand, the GBP traded weak on Thursday against most of its rivals as investors continue to bet on a less aggressive Bank of England (BoE). Ahead of the August 3 decision, the World Interest Rate Possibilities (WIRP) suggest that the odds of a 50 basis point (bps) increase dropped nearly to 35%, and markets are discounting a terminal rate of 5.75-6.0% vs. 6.5% early in July.

EUR/GBP Levels to watch

From a technical perspective, the EUR/GBP pair retains the short-term bearish bias according to indicators on the daily chart. The Relative Strength Index (RSI) remains in negative territory. At the same time, the Moving Average Convergence Divergence (MACD) printed a red bar following two consecutive weeks of green bars, indicating that the bears are in the driver’s seat.

Support levels: 0.8540, 0.8530, 0.8500 (cycle low)

Resistance levels: 0.8582 (20-day Simple Moving Average), 0.8600, 0.8630

EUR/GBP Daily chart

EUR/GBP

Overview
Today last price	0.8561
Today Daily Change	-0.0005
Today Daily Change %	-0.06
Today daily open	0.8566

Trends
Daily SMA20	0.8584
Daily SMA50	0.86
Daily SMA100	0.8693
Daily SMA200	0.8728

Levels
Previous Daily High	0.8586
Previous Daily Low	0.8561
Previous Weekly High	0.8701
Previous Weekly Low	0.857
Previous Monthly High	0.8658
Previous Monthly Low	0.8518
Daily Fibonacci 38.2%	0.8571
Daily Fibonacci 61.8%	0.8577
Daily Pivot Point S1	0.8556
Daily Pivot Point S2	0.8546
Daily Pivot Point S3	0.853
Daily Pivot Point R1	0.8582
Daily Pivot Point R2	0.8597
Daily Pivot Point R3	0.8607

Author

Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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