EURGBP is up by over 20 pips from its intraday lows as it trades around 0.8942 after the BOE warned that banks should brace for a no-deal Brexit. The warning has worried a few investors, however, is it enough for EURGBP to extend its bullish run with the ECB rate decision on tap?
Scheduled at 12:45 pm GMT, market participants are expecting interest rates to be kept steady at 0.00%. However, there are a few who think that the central bank would increase its Pandemic Emergency Purchase Programme (PEPP). My colleague Eno Eteng has written an extensive piece on how the ECB’s decision could affect the euro. You may read it here.
Prior to that, the UK Construction PMI report for May will come out at 9:30 am GMT. The forecast is for it to print at 29.5. Then at 10:00 am GMT, the euro zone retail sales report for April is anticipated to print a 15% contraction.
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On the 4-hour time frame, it can be seen that the rising trendline I pointed out yesterday held well and provided EURGBP with support.
A closer look at the 1-hour chart also shows that a double bottom chart pattern formed. When you enroll in our free forex trading course, you will learn that this is widely considered as a bullish reversal indicator. EURGBP has already broken the neckline resistance which could indicate the presence of buyers. However, the currency pair is now testing the 100 SMA and 200 SMA. If resistance at this price holds, we could see EURGBP test the neckline for support at 0.8920. If there are enough sellers in the market, the currency pair may even fall to the trendline support at 0.8892.
On the other hand, a bullish close above today’s Asian session highs at 0.8952 could mean that there are still buyers left in the market. EURGBP may soon then trade all the way up to near-term resistance at 0.9053 where it topped on May 29.