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Europound

ECB vs BoE: What's next for EUR/GBP?The European Central Bank (ECB) and the Bank of England (BoE) both raised interest rates by 50 basis points at their final meetings of the year. The Eurozone's policy rate was hiked to 2.5%, the highest in fourteen years, and the UK's to 3.5%, the highest since late 2008. In contrast to the relatively dovish BoE meeting, the ECB meeting was substantially more hawkish than the market had anticipated, prompting the EUR/GBP cross to surge. In a divided vote, the BoE decided to raise rates by 50bps, with one member (Mann) pressing for 75bps and two members (Tenreyro and Dhingra) preferring to maintain current rates. According to the BoE statement, more increases in the Bank Rate may be necessary due to ongoing inflationary pressures fueled by a tight labour market. In the first quarter of 2023, UK CPI inflation is expected to fall as household spending and property market indicators weaken. Even if the ECB lowered its speed of rate rises from 75bps to 50bps, it made it clear that interest rates will still have to climb consistently and by a steady pace to reach restrictive levels to get inflation back to 2% quickly. The ECB also indicated that quantitative tightening will begin in March 2023. The ECB will not reinvest all expiring securities' principal payments in the Asset Purchase Programme (APP), meaning its asset portfolio of eurozone bonds will fall at an average pace of €15 billion per month until Q2 2023, with the subsequent rate established over time. During the press conference, ECB President Lagarde reiterated that the ECB will rise with tenacity and that 50bps may be the right rate hike for the next meeting and the two after that. She also hinted that once the peak is achieved, "it won't be enough to hit and withdraw," and that high interest rates will be in place for a longer period of time. Historically, the interest-rate gap between the Euro Area and the UK has been one of the key driver behind the EUR/GBP exchange rate. Market reactions to the BoE and ECB meetings: Yields differential matter Before today's meeting, the market was highly dovish on the ECB, pricing in a peak of 2.8% next year, while it had already built in hawkish expectations on the BoE, pricing in a peak of 4.6% in the Bank Rate in August 2023. German bond yields soared by 15 basis points after the ECB rate announcement and during Lagarde's press conference, but UK gilt yields stayed nearly unchanged from pre-BoE meeting levels. The negative yield spread between German and UK sovereign bonds shrank throughout the curve today as investors repriced ECB rise expectations. The 2-year German-UK yield gap narrowed to -1% and the 10-year one to -1.2%.  In the coming weeks/days, market expectations for the ECB rate may continue to rise as ECB hawks are likely to reiterate their aggressive stance. The Bank of England's market pricing may stay broadly stable, given it has already incorporated heightened expectations ahead to the meeting. This may indicate that the negative yield disparity between German and British bonds will continue to narrow, exerting upward pressure on the euro-pound exchange rate. A further 30 basis point reduction in the negative yield spread between 2-year German bonds and UK gilts, lowering it from -1% to -0.70%, might drive EUR/GBP to 0.89 or near to the psychologically important level of 0.90.
by Capitalcom
EURGBP Short Trade SetupA bearish opportunity recently presented itself on the euro-pound trading chart. This follows from the bearish harami candlestick pattern which printed just below the 0.87500 psychological level. A stop loss above the same psychological level and a profit target anywhere between your entry and the swing low of 0.83401 could give you a reward-to-risk ratio as high as 3 or even higher. Be sure to size your position based on your trading account balance and apply other risk management measures before placing trades. Rooting for you! Your FX Plug FX:EURGBP
Short
by charles-okoukoni
Short term bias is mildly bullish on EURGBPEURGBP - Intraday - We look to Buy at 0.8411 (stop at 0.8396) Trading has been mixed and volatile. Short term bias is mildly bullish. We look to buy dips. 0.8410 has been pivotal. Intraday dips continue to attract buyers and there is no clear indication that this sequence for trading is coming to an end. Our profit targets will be 0.8448 and 0.8458 Resistance: 0.8435 / 0.8450 / 0.8460 Support: 0.8420 / 0.8410 / 0.8400 Risk Disclaimer The trade ideas beyond this page are for informational purposes only and do not constitute investment advice or a solicitation to trade. This information is provided by Signal Centre, a third-party unaffiliated with OANDA, and is intended for general circulation only. OANDA does not guarantee the accuracy of this information and assumes no responsibilities for the information provided by the third party. The information does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. You accept that you assume all risks in independently viewing the contents and selecting a chosen strategy. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, Oanda Asia Pacific Pte Ltd (“OAP“) accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore customers should contact OAP at 6579 8289 for matters arising from, or in connection with, the information/research distributed.'
Long
by OANDA
Euro vs Pound (EURGBP) analysis: Who is the least bad?EUR/GBP fundamental analysis The Bank of England (BoE) raised its Bank rate by half a percentage point to 1.75 percent at its August meeting, the highest rate hike in 27 years, owing to elevated inflationary pressures exacerbated by Europe's recent gas crisis. However, the pound did not surge following the rate announcement since the Bank of England's policy statement painted a bleak economic picture for the coming years, due to a sluggish growth and persistently high inflation outlook. "GDP growth is slowing," and the UK is now expected to enter recession in the fourth quarter of this year, while inflation is forecasted to peak at 13.3% in October. As the BoE will now take a data-dependent approach, the pound cannot rely on its rate divergence advantage against the euro any longer. Markets will be less concerned about the BoE-ECB policy divergence and more focused on economic indicators in the coming months. Given that the two economies are exposed to similar shocks and negative effects real incomes and consumption, a sideways phase, characterised by fairly tight trading ranges, could therefore come forward for EUR/GBP in the near term, pending more information on the length and size of the upcoming recessions. EUR/GBP technical analysis On a technical level, 0.849-0.85 already represents an area where the euro could see selling pressure. Downwards, 0.834 has shown solid support over the past weeks, despite the market pricing in the BoE’s 50 basis point hike in advance. Rising RSI and MACD attempting a bullish crossover can provide the EUR with a very slight tailwind in the very short term. However, the single currency lacks the catalysts that could lead to a material appreciation against the pound. The 5-year yield spread between Germany and the United Kingdom, which has been strongly correlated with the EUR/GBP exchange rate, should be constantly monitored, to keep track of the relative growth outlook between the Euro Area and the UK economy.
by Capitalcom
EUR/GBP: IDEAHere is an analysis on the EUR/GBP Currently trading @ 0.85800 We expect a reversal on the pair as the pair is trading @ support/resistance levels & the presence of a bullish Harmonic @ this level signals reversal We expect the pair to 0.86200 if its a retracement before continuing its downtrend If its a reversal then the pair might go back to 0.87 On the other hand if the pair ignores this reversal signal and breaks below current price/support we'd expect it to test next support @ 0.85400
by fxspott
EUR/GBP Forecast: Long then ShortHere is our analysis on EUR/GBP Currently the pair is trading @ 0.85900 The pair has broken above resistance @ 0.85500 and might attempt to test next resistance @ 0.86500 Only if the pair manages to break above the current Descending channel. If not pair might fall back to the resistance @ 0.85500 Bearish Harmonic formation on 1H chart signaling reversal link to previous analysis below Note: All investments involve risk, our analysis and trading strategy does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make.
Long
by fxspott
EUR/GBP Forecast: ShortHere is an analysis on the EUR/GBP Currently @ 0.86258 Bearish Harmonic Pattern on the 4H chart suggests strong bearish movement on the pair We expect the pair to test support/resistance @ 0.85500 If the pair manages to break above resistance @ 0.86500 then we might see it test 0.87 OUR POSITIONS: Buy Stop @: 0.86700 Buy Stop TP @: 0.87 Sell Stop @: 0.86 Sell Stop TP @: 0.85600 Note: All investments involve risk, our analysis and trading strategy does not guarantee future results or returns. Investors are fully responsible for any investment decisions they make.
Short
by fxspott
$EURGBP - Cup and Handle, Wedge, H&S and some economic dataHi guys! 👋🏻 🔔 Hourly EUR / GBP chart created an inverted cup and handle pattern, supporting the downtrend. 🔔 This pattern indicates that the bears are on duty overall and will continue the downtrend after breaking the lowest support, in this case 0.88700, after a slight upward correction. 🔔 Factors that could support the EUR / GBP's downward trend are extensions of the lockdowns in the Euro zone, while the number of Covid-19 cases has increased in previously heavily affected regions such as Spain and Italy. Political developments in Italy also play an important role in the economic recovery and the greater stability of the euro area. 🔔 EUR / GBP touched a significant support level at 0.88700 and remained above the support. As the 4H chart below shows, if the euro goes below this support it could be in high danger. The December 25, 2020 correction created a sharp descending triangle, and a breakout from its upper edge will signal a strong uptrend. If the breakout is confirmed, the first resistances to watch are 0.89440 and 0.90000. 🔔 On the grid below, the pair has formed the Head and Shoulders pattern and is the support neckline at 0.88700. As the pair is still above the neckline, there is no confirmation of the pattern, but if the pair breaks below the 0.88700 support, the bearish trend will continue until 0.87900 and below it 0.86900 to complete the Head and Shoulders pattern. 🔔 Confirmation of the downtrend is breaking down the current channel and closing below the 0.88700 support ✊🏻 Good luck with your trades! ✊🏻 If you like the idea hit the 👍🏻 button, follow me for more ideas.
Short
by azizelliott
3
EURGBP - Great R/R TRADE OPPORTUNITY!!!EURGBP - Great R/R TRADE OPPORTUNITY!!! This pair did my head in yesterday, nearly get stopped out but I was disciplined and the patience paid off this morning waking up to green screen! That's the best feeling but everyday isn't like that. Don't get your emotions get to you whilst trading, I actually learnt this the hard way and I'm still working on that but you are who you bring to the market, there are great psychology books to help with this - if you are struggling message me privately I will be sure to give you trading reading list. I got in at the lows of the formation, scaled in - Took 60% of partial profits got two more long positions in. Technical aspects: Pattern: Wedge Support: 0.88240, 0.88100, 0.87960 Resistance: 0.88380, 0.88520, 0.88780, 0.89100 Fundamental aspects: BoE TODAY - Focus on negative rates - I don't personally think they will go towards negative rates, vaccine roll out is positive, no further QE is really needed. Don't forget to enter this trade idea, add your own trading plan towards it. Add further confluence. Key tip: Be humble - There are so many ways to trade out there, but most important is if your way of trading is gaining capital - Keep Doing You! Have a great Thursday!! Trade Journal (Just a trade idea, not a recommendation)
by Trade_Journal
1