Yesterday, Finnish elections and Greece soured the euro and supported the EURGBP’s descent to 0.8750. An expected correction after the failure at the 0.8920 highs, the pair remains bullish as it finds support at 0.8750 and begins to rally off the lows at 0.8740.
The EURGBP pair found support once again at the 61.8% Fibonacci level from the weekly chart at 0.8735. Despite the near-reversal, the pair remains well-supported and in today’s trading session has moved off the 0.8750 lows as it consolidated above 0.8750 at yesterday’s close. The bullish behavior around 0.8750, as price failed to push lower, prompted buyers to step in.
Judging from the hourly chart, the pair has plenty of room to stage a corrective rally to 0.8810. However, I consider a break above 0.8800 a bullish development and would expect a close above the whole number to prompt further gains toward previous resistance at 0.8840/50.
After a blank economic calendar from the UK, the market looks ahead to the release of the Bank of England (BoE) meeting minutes tomorrow. If there are no hawkish clues, the market will be very disappointed and could help send the pair past 0.8850 and back to the 0.8920 highs. On the other hand, any hints of more hawks in the BoE beyond the expected 3 (Sentence, Weale, and Dale) and the EURGBP could find itself below 0.8750 to challenge the lows at 0.8720.
Read also:
- The Week Ahead April 17 2011 (FMFX)
- Euro Gains on Bets ECB Will Raise Rates Even Amid Sovereign-Debt Turmoil (Bloomberg)
- U.K. Pound Declines Versus Euro on Bets BOE Will Increase Rates After ECB (Bloomberg)
- Kenny Says Ireland Will Not Default as Greece Concerns Mount (Bloomberg)
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