The British pound tipped lower against the euro as investors speculate the U.K. to face a protracted economic downturn this year, and the EUR/GBP may continue to hold a broad range over the near-term as market participants 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]
The British pound tipped lower against the euro as investors speculate the U.K. to face a protracted economic downturn this year, and the EUR/GBP may continue to hold a broad range over the near-term as market participants weigh the outlook for future policy. After reaching a low of 0.7694 in October, the euro-pound jumped to a high of 0.9805 in December as the Bank of England took unprecedented steps to stimulate the ailing economy however, the lack of momentum to break back above the 50-Day moving average could lead the pair to trend sideways over the near-term. Nevertheless, the recent appreciation in the exchange suggests investors are becoming less bullish against the British pound as the BoE maintains a dovish outlook for inflation however, as the central bank maintains its current policy in place, long-term expectations for higher interest rates could lead the EUR/GBP lower throughout the second-half of the year. At the same time, market participants anticipant the European Central Bank to tighten policy over the next 12 months however, as policymakers expect economic activity to remain subdued until 2010, fears of a prolonged recession could weigh on the euro going forward. Over the next few hours of trading, we are like to see the euro-pound continue to hold along the 120 SMA at 0.8601 as the global economic calendar remains fairly light but, a bigger-than-expected rise in public finances could weigh on the British pound as investors weigh the prospects for a sustainable recovery. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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