EUR/GBP Holds Near-Term Support, Retains Bullish RSI Momentum
Despite the downward revision in the Bank of England’s (BoE) growth forecast, the long-term outlook for EUR/GBP remains bearish as Mark Carney and Co. remains on course to normalize monetary policy, while the European Central Bank (ECB) continues to embark on its easing cycle.
With the U.K. election out of the way, the sharp reversal from 0.7482 may highlight a near-term top for the euro-sterling, and we may see a resumption of the long-term downward trend as ECB President Mario Draghi pledges to retain the EUR 60B/monthly purchases.
However, the lack of momentum to close below 0.7120 (100% expansion) to (0.7150 (23.6% retracement) may largely produce range-bound prices in the days ahead especially as the Relative Strength Index (RSI) retains the upward trend carried over from back in March. As a result, we would need a break of the bullish momentum to revert back to the approach of selling-bounces in EUR/GBP.
For a Greater Discussion on the Trade Setup, Join DailyFX on Demand!
Follow me on Twitter at @DavidJSong.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.