The British pound continued to hold a broad range against the euro, with the pair failing to cross above 0.8700 for the second time this month, and the EUR/GBP may trend sideways 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]
The British pound continued to hold a broad range against the euro, with the pair failing to cross above 0.8700 for the second time this month, and the EUR/GBP may trend sideways over the near-term as investors 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 soften the landing of the economy however, as investors speculate the central bank to tighten policy over the next 12 months, long-term expectations for higher interest rate could lead the pair lower throughout the second half of the year. As a result, the EUR/GBP should continue to hold below 0.8740-50 (50.0% Fib), and may work its way towards the lower end of its current range over the remainder of the month as Credit Suisse overnight index swaps show market participants anticipate the BoE to raise the key rate by more than 100bp over the following year. Over the next few hours of trading, we may see the euro-pound continue to test 0.8700 for resistance however, the bearish divergence in the RSI suggests we may see an intraday reversal as the pair continues to trend sideways. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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