EUR/GBP prints four-day uptrend near 0.8850 despite ECB policymakers’ cautious optimism

EUR/GBP buyers keep the reins for the fourth day in a row, mildly bid near 0.8855 heading into Tuesday’s London open. In doing so, the cross-currency pair benefits from the broad-based Euro strength, as well as take clues from the comparatively downbeat UK catalyst, amid slightly hawkish European Central Bank (ECB) officials.

Recently, ECB Chief Economist Philip Lane mentioned that the current data suggest we have to raise interest rates again at the upcoming meeting. The policymaker also added, “Beyond May 4 meeting, further rate hikes will depend on data.” 

On Monday, European Central Bank’s (ECB) Governing Council member Pierre Wunsch said in the interview with the Financial Times (FT) that the central bank will continue raising interest rates until wage growth slows. On the same line, ECB Governing Council member and Bank of France head Francois Villeroy de Galhau said on Monday that the central banks’ core mandate worldwide is price stability and climate change already affects the level of prices and activity. Further, ECB executive board member, Fabio Panetta, said “Geopolitics risk persistent inflation volatility.” These statements are in line with the latest comments from ECB President Christine Lagarde who said there is still “some way to go” before the ECB finishes hiking interest rates. 

On the other hand, “BoE must stop the risk of high inflation becoming embedded in the economy,” said Bank of England (BoE) Deputy Governor Dave Ramsden in an interview with The Times on Friday. The policymaker also added that there were still signs of stubbornly high inflation while mentioning that there was a greater risk of the BoE doing too little rather than too much. 

It’s worth noting that the recent statistics from the UK and the Eurozone have been quite mixed with the British data lagging on the activity front than those from the old continent.

Amid these plays, the Eurozone and German Treasury bond yields remain firmer for the third consecutive day while those for the UK’s bonds ease of late.

Moving on, a light calendar in Eurozone and the UK may restrict immediate EUR/GBP moves but the comparatively more hawkish comments from the ECB policymakers and upbeat EU data keeps the pair buyers hopeful.

Technical analysis

Although the EUR/GBP bulls are gathering strength of late, a six-week-old horizontal resistance near 0.8865 appears a tough nut to crack for them.