Following the initial upsurge during Draghi's presser, the EUR/GBP pair came in under pressure as investors assessed his statements as euro-negative. After rising to a session high at 0.8475, the pair turned around and dropped to 0.8430, where it's recording a daily loss of 0.65%.
As expected, the ECB left its monetary policy unchanged on Thursday and gave no clear hints towards a possible policy move anytime soon. Although Draghi reiterated that the economic recovery has been broad and strong, he emphasized that the governing council hasn't discussed exiting stimulus nor removing the easing bias on interest rates. A recent Bloomberg survey suggested that the ECB is likely to make a shift in rate guidance at the June 8 meeting and announce a QE tapering at the September 7 meeting.
Regarding the political situation in the euro area, Draghi said that they were discussing policies at their meetings, not politics, and added that concerns over global protectionism have eased lately.
- Draghi speech: There are tentative signs of build up of producer prices
- Draghi speech: We have not discussed exiting stimulus
- Draghi speech: No need to discuss guidance sequencing
Technical outlook
The pair faces the immediate support at 0.8400 (psychological level) ahead of 0.8350 (Apr. 21 low) and 0.8320 (Apr. 18 low). To the upside, with a break above 0.8500 (psychological level), the pair could aim for 0.8560 (Apr. 26 high) and 0.8590 (Apr. 4 high).
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