Political tensions in the U.K. weighed on the British pound during the previous week, and pushed the EUR/GBP higher to retrace the sell-off from the end of May, and the pair may continue to advance over the near-term as investors weigh the outlook for future policy.
[B]Currency Pair: [/B]EUR/GBP
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Flat
[B][U]Analysis[/U][/B]
Political tensions in the U.K. weighed on the British pound during the previous week, and pushed the EUR/GBP higher to retrace the sell-off from the end of May, and the pair may continue to advance over the near-term as investors weigh the outlook for future policy. After reaching a low of 0.8233 on 11/28, the EUR/GBP surged to a high of 0.9805 in December as the Bank of England lowered the benchmark interest rate at a record pace however, Credit Suisse overnight index swaps show investors expect the central bank to tighten policy over the medium-term, and forecasts the BoE to increase the interest rate over the next 12 months. As a result, we may see the pound continue to hold a bullish tone against its currency counterparts as investors raise bets for higher borrowing costs in the U.K., and the euro-pound may continue to fall lower to retrace the advance from the previous year. Over the next few hours of trading, we are likely to see the EUR/GBP fall back below 0.8700 to fill-in the gap from the 120 SMA however, as investor confidence in the Euro-Zone is expected to improve for the third consecutive month in June, a jump in the Sentix survey could lead the pair higher to push back above 0.8830-40 (61.8% Fib). Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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