- EUR/GBP looks to test symmetrical triangle hurdle at 0.8583.
- Daily chart suggests a golden cross formation, with eyes on ECB.
- The RSI looks north above the midline, pointing to more gains.
EUR/GBP is trading firmer in early European trading, as EUR bulls bet on a more hawkish than expected ECB monetary policy announcement.
Markets have widely priced in the central bank to announce the end of its Asset Purchase Programme (APP) on July 1. Lagarde and Company are set to hint at a July rate hike, with more signals on an aggressive rate hike track could be seen, given that Eurozone Q1 GDP data was revised upwardly on Wednesday.
On the GBP side of the story, cable remains offered amid the UK political and the renewed Brexit concerns. Meanwhile, a classic caution trading ahead of the ECB event also keeps the higher-yielding pound on the back foot, in turn, supporting EUR/GBP.
Technically, EUR/GBP’s daily chart shows that the price is wavering within a month-long symmetrical triangle formation, with bulls now eyeing a test of the triangle resistance at 0.8583.
Ahead of that, they need to find a strong foothold above 0.8565 recent range highs.
A sustained move above the triangle resistance will confirm an upside break, opening doors towards 0.8600 and beyond.
The 14-day Relative Strength Index (RSI) is looking north above the midline, justifying the ongoing uptrend.
Adding credence to the bullish potential, the upward-sloping 50-Daily Moving Average (DMA) is on the verge of crossing the horizontal 200 DMA for the upside.
If the crossover occurs on a daily closing basis, it would validate a golden cross formation, backing a fresh upswing in the cross.
EUR/GBP: Daily chart
However, if the ECB decision disappoints the hawks, then the cross could fall back towards the powerful confluence support of 0.8512, where the triangle support and horizontal 21-DMA coincide.
A breach of the latter will invalidate the bullish thesis in the near term, exposing the downside towards the 0.8480 demand area.
EUR/GBP: Additional levels to consider
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