- Summary:
- Following the BOE's emergency rate cut, the EUR to GBP exchange rate continues to trade higher. It will be the ECB's turn to announce its decision today.
EURGBP continues to trade higher today as the pound’s weakness following the BOE’s rate cut lingers. The currency pair is up 33 pips from its opening price at 0.8811. However, can it extend its gains with the ECB also expected to ease monetary policy later today?
Just like the Federal Reserve, the Bank of England (BOE) had a 50 basis point-emergency rate cut yesterday. According to the central bank, the move is aimed at supporting the economy as the coronavirus outbreak continues to disrupt business activity.
Earlier today, WHO already labeled the disease as a pandemic. UK Prime Minister Boris Johnson is expected to head a meeting to enter a new phase of the government’s plan in battling the disease. Fiscal measures from the UK would probably have a bearish effect on EURGBP because these would help stimulate growth.
Meanwhile, at 12:45 pm GMT, it will be the ECB’s turn to announce its easing measures to support the euro zone economy. It is widely expected that ECB President Lagarde will announce a rate cut, but by how much? We’ll need to tune in to find out. The central bank is also anticipated to increase its asset purchase program.
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EUR to GBP Outlook
The 15-minute chart of EURGBP shows more upside potential for the currency pair. It is currently testing a confluence of support around 0.8810. For one, this price coincides with the rising trend line from connecting yesterday’s and today’s lows. It also aligns with the 38.2% Fib level when you draw the Fibonacci retracement tool from today’s low to its Asian session highs.
However, be wary of a break of the rising trend line. It could mean that a deeper pullback is ahead of EURGBP. On the hourly time frame, we could see the currency pair trade lower to 0.8745 and still maintain its uptrend. It could find support at the rising trend line here (from connecting the lows of March 6, March 9, March 10, and March 11). This price also coincides with the highs of the EUR to GBP exchange rate on March 9.