The British pound weaken against the euro after the Bank of England unexpectedly expanded its asset purchase program last week, and the EUR/GBP may continue to hold a broad range 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 weaken against the euro after the Bank of England unexpectedly expanded its asset purchase program last week, and the EUR/GBP may continue to hold a broad range 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 Governor Mervyn King took unprecedented steps to stimulate the ailing economy however, the lack of momentum to push back above 0.8750-60 (50.0% Fib) may keep the pair range-bound throughout August as the BoE and ECB maintain a dovish outlook for inflation. Over the next few hours of trading, the euro-pound may retrace the sharp rally from the previous day and fill-in the gap from the 120 SMA at 0.8520 as the pair fails to break above the psychological barrier at 0.8600, but we may see the pair continue to push higher over the next 24 hours of trading as the U.K. labor market is widely expected to weaken further. Nevertheless, as risk trends continue to dictate price action in the currency market, a rise in risk appetite could lead the pair higher as market participants move into higher risk/reward investments. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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