The EURGBP pair has experienced a steep intraday slide on the back of a transient recovery by the British Pound on one hand, and poor flash manufacturing PMI results from Germany and France on the other. There is also a market expectation of monetary policy easing by the European Central Bank tomorrow. The EURGBP is currently trading at 0.89262 and is challenging the S2 pivot level on the 4-hour chart.
All eyes are now firmly focused to the ECB. The general consensus is for the ECB to loosen its monetary policy tomorrow and this is expected to include a variety of measures such as:
- A possible interest rate cut.
- Potential recommencement of its stimulus package.
- Alterations to its ‘forward guidance’ protocols.
Technical Plays for the EURGBP
The 4-hour candle is challenging the S2 pivot to the downside, but this candle is still active and therefore a downside break is yet to be confirmed. A confirmed break (double candle close below S2 or a 3% downside penetration of this pivot level) will see EURGBP make further inroads to the downside to target the S3 pivot at 0.88901.
If price stays above S2, then a retracement that will target 0.89425 (the S1 pivot resistance) may be on the cards. A Fibonacci trace from this week’s high price of 0.90473 to the intraday low of 0.8906 shows that the 23.6% and 38.2% retracement levels are key areas for upside retracement rallies, as these are located at the S1 pivot as well as the previous monthly low that was breached by today’s downward price movement. Traders looking to sell on the rallies may be best served focusing on these retracement levels.Don’t miss a beat! Follow us on Twitter.