EUR/GBP reverses 100 pips higher from sub-0.8300, multi-year lows as Lagarde opens door to 2022 rate hike


 

  • EUR/GBP reversed 100 pips higher from just above late-2019/early-2020 lows in the 0.8280s after hawkish ECB commentary. 
  • President Lagarde refused to repeat her previous assertion that a rate hike in 2022 is very unlikely.

 

EUR/GBP has reversed sharply higher from its initial post-BoE session lows in the 0.8280s, where the pair came within a whisker of hitting multi-year lows from back in late-2019/early-2020, and now trades in the 0.8380s. That means the pair, having been as much as 0.5% lower on the day, now trades 0.75% higher. The reversal came after, in her usual post-ECB policy announcement press conference, President Christine Lagarde opted not to repeat her prior assertion that a 2022 rate hike was highly unlikely. The President instead opted to emphasise how the ECB would take a data-dependant approach and said she would make no pledges without conditionalities. 

Market participants interpreted these comments from Lagarde as opening the door to a rate hike sometime later in 2022, boosting the euro substantially. Indeed, Bloomberg just report that, according to sources, the ECB is prepared to recalibrate its policy guidance at the March meeting when it releases new economic forecasts, with policymakers reportedly in agreement that it is not sensible to exclude the possibility of a 2022 rate hike. So it seems that the ECB has won the battle of hawkish surprises this Thursday, with EUR/GBP’s post BoE rate decision weakness having proven short-lived. 

Recall that sterling was boosted prior to the ECB’s rate decision after the BoE hiked interest rates by 25bps and revealed that four out of nine rate-setters had actually wanted a larger 50bps move. EUR/GBP is now eyeing a test of the 0.8400 level. As the ECB tightening narrative gains more traction and tightening bets build, this could be a catalyst to disrupt EUR/GBP’s steady grind lower in recent months. Yes, the BoE is tightening too, and is a long way ahead of the ECB regarding policy normalisation, but there are serious doubts about the health of the UK economy with the cost of living crisis set to worsen substantially in April.   

EUR/Gbp

Overview
Today last price 0.8387
Today Daily Change 0.0057
Today Daily Change % 0.68
Today daily open 0.833
 
Trends
Daily SMA20 0.8346
Daily SMA50 0.8423
Daily SMA100 0.8461
Daily SMA200 0.8519
 
Levels
Previous Daily High 0.8351
Previous Daily Low 0.8324
Previous Weekly High 0.8423
Previous Weekly Low 0.8306
Previous Monthly High 0.8423
Previous Monthly Low 0.8305
Daily Fibonacci 38.2% 0.8335
Daily Fibonacci 61.8% 0.8341
Daily Pivot Point S1 0.8319
Daily Pivot Point S2 0.8308
Daily Pivot Point S3 0.8292
Daily Pivot Point R1 0.8346
Daily Pivot Point R2 0.8362
Daily Pivot Point R3 0.8373

 

   

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Feed news Join Telegram

Recommended content


Recommended content

Editors’ Picks

EUR/USD drops back below 0.9700 as yields rebound ahead of US GDP, German inflation

EUR/USD drops back below 0.9700 as yields rebound ahead of US GDP, German inflation

EUR/USD sellers are up and roaring as sour sentiment joins firmer yields to renew the downside during early Thursday, after a day full of surprises and positive performance. Germany’s HICP may not impress pair buyers unless US GDP disappoints.

EUR/USD News

GBP/USD turns sideways around 1.0800, focus shifts to US/UK GDP data

GBP/USD turns sideways around 1.0800, focus shifts to US/UK GDP data

GBP/USD is expected to resume its upside journey after concluding its correction to near 1.0800. To revive UK’s financial stability, the BOE announced a bond-buying program worth GBP 65 billion. Does BOE really not have the stomach to fight inflation while simultaneously keeping financial stability?

GBP/USD News

Gold sees cushion around $1,650 after a corrective move, US GDP buzz

Gold sees cushion around $1,650 after a corrective move, US GDP buzz

Gold price is experiencing a healthy correction in the Tokyo session after witnessing a bumper rally. The precious metal is expected to find significant bids around the immediate cushion of $1,650.00 as the downside bias is not backed by momentum. 

Gold News

XRP: A checklist for the next rally

XRP: A checklist for the next rally

XRP price has shown incredible buying pressure after a dip into the $0.381 to $0.433 demand zone. A recovery above $0.464 could ignite the next run-up, but ideally, a retest of $0.397 could be a good place to be a bull.

Read more

Economic catastrophe likely for US and Europe?

Economic catastrophe likely for US and Europe?

Clifford Bennett joined ausbiz TV to discuss the current state of currencies and what the forecasts are telling us. Clifford states that ‘it has been very easy to this point but we need to get back on our toes’ as we approach volatile levels in currencies.

Read more

Forex MAJORS

Cryptocurrencies

Signatures