The British pound continued to lose ground against the euro as market participants speculate the Bank of England to expand its asset purchase program later this year, and the EUR/GBP may continue to retrace the sell-off from the first-half of the year as the European Central Bank concludes its easing cycle.
[B]Currency Pair:[/B] EUR/GBP
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Flat
[B][U]Analysis[/U][/B]
The British pound continued to lose ground against the euro as market participants speculate the Bank of England to expand its asset purchase program later this year, and the EUR/GBP may continue to retrace the sell-off from the first-half of the year as the European Central Bank concludes its easing cycle. After reaching a low of 0.7694 in October, the euro-pound pushed to a high of 0.9805 in December as BoE Governor Mervyn King took unprecedented steps to stimulate the ailing economy, and fears of a protracted downturn in the U.K. is likely to drag on the exchange rate as investors weigh speculate the central bank to ease policy further in August. At the same time, Credit Suisse overnight index swaps show market participants anticipate the BoE to tighten policy over the next 12-months, and long-term expectations for higher interest rates in the U.K. may continue to support the British pound throughout the second-half of the year. Over the next few hours of trading, we may see the EUR/GBP trade along the 120-SMA at 0.8597 as the global economic calendar remains fairly light, and the pair is likely to hold its current range throughout the month as investors weigh the outlook for future policy. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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