EURGBP Trades in a Triangle Ahead of BOE Rate Decision. Here are the Levels to Watch Out For

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Written By: Angeline Feliciano
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    Summary:
  • EURGBP is trading higher in today’s Asian session ahead of the much-anticipated BOE rate decision. Here's what we can expect today.

EURGBP is trading higher in today’s Asian session ahead of the much-anticipated BOE rate decision. The currency pair is currently trading at 0.8960, up from its opening price of 0.8953.

The weakness in the pound could reflect the market’s expectations of the upcoming central bank decision. While the consensus is for interest rates to remain unchanged a t0.10%, it is widely expected that the BOE would increase its Quantitative Easing program. The forecast is for an uptick from 645 billion GBP to 745 billion GBP in asset purchases. This is to cushion the economic contraction brought about by the lockdowns caused by CoVid-19.

Traders will also be keeping an ear out for the BOE’s future plans. There are rumors that the central bank may be open to implementing negative rates soon. If BOE Governor Andrew Bailey suggests this in his remarks, we could see further pound weakness. On the other hand, if he expresses more hesitation in adopting negative rates, EURGBP could trade lower.

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EURGBP Outllook

When you connect the highs and lows of EURGBP on the 1-hour chart, it can be seen that the currency pair is making lower highs and higher lows. Consequently, a symmetrical triangle has formed. By enrolling in our free forex trading course, you will learn that this is widely considered as a neutral indicator. That is, until a breakout happens. 

With that said, a strong close above yesterday’s highs at 0.8989 could invalidate resistance at the top of the triangle. It could then imply that EURGBP may be on its way to near-term resistance at 0.9014.

On the other hand, a strong bearish close below the lows of June 16 at 0.8911 could mean that sellers are dominating the market. The currency pair could then fall lower to 0.8867 where it bottomed on June 9.

Written By: Angeline Feliciano

Angeline Feliciano has been trading Forex for over ten years. She has invaluable experience working in FX education companies like BabyPips.com and Learn to Trade as a trader, currency analyst, trading coach, and presenter. Aside from these roles, she has also created intensive educational content on fundamental analysis which is heavily sought after by retail traders. She has taught hundreds of people how to trade the FX market in the Philippines and in Australia. When she is not trading, you can find her in the gym lifting weights.

Published by
Written By: Angeline Feliciano