News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • S&P 500, Nasdaq Rally After the Fed; 10 Year Yield to Two-Month-Highs https://www.dailyfx.com/forex/market_alert/2021/09/23/SPX-SPY-ES-SP500-Nasdaq-NQ-QQQ-Rally-After-the-Fed-10-Year-Yield-2-Month-High.html https://t.co/peftVleO0y
  • #Bitcoin Outlook: $BTCUSD Bounce From 40K, Fake-out or Shake-out? - https://t.co/ixsRMKgCom https://t.co/KDQv4wgfot
  • While JPY gets clobbered, CHF decides to turn a blind eye to yields $CHF https://t.co/MViWZiiPZ7
  • The surprise 100 basis point cut from the Turkish central bank (to 18%) generated the expected pressure for $USDTRY. That said, I don't think it was the market that decided the momentum should die out at 8.8000 again... https://t.co/4jmOPnzzK9
  • surprised that $NQ is holding up so well with what rates are doing. 10 year yield at a 2 month high, $Nasdaq still holding resistance at prior support https://t.co/UBWBxY2nFC
  • The S&P 500 has recovered all the ground it lost at the start of the week and the Dollar has slumped post FOMC and PMIs. DailyFX's @JohnKicklighter gives a brief overview of the market for Thursday! https://t.co/jihKB44ELn
  • https://t.co/lbNvVbQq4n
  • The future taper isn't enough to urge the Dollar to a critical bullish break. In turn, $EURUSD has reversed shy of of August's trough and keeps in play an inverse head-and-shoulders pattern with a neckline at 1.19 https://t.co/EgUtX6Pmvy
  • USD/CAD testing short-term moving average support. Traders have cut their long exposure over the week. Get your market update from @nickcawley1 here:https://t.co/iEL5cbFnHs https://t.co/6kLkUFkFvU
  • In the West, that qualifies as a default action. Let's see how it is treated in the world's second largest economy https://t.co/PKWy7SE8Dt
EUR/GBP Finds Support Within Descending Channel, Eyeing 0.8450

EUR/GBP Finds Support Within Descending Channel, Eyeing 0.8450

Daniela Sabin Hathorn, Analyst

Key Talking Points:

  • EUR/GBP attempts to build momentum but faces tough resistance
  • Sellers will be aiming to breach the lower bound of the channel

EUR/GBP is back on track and has finally managed to break below 0.85. The pair had been sticking firmly to a descending channel since mid-April but got side-tracked three weeks ago when the Pound suffered a bearish run on the back of the highly expected “freedom day” leaving investors with questions about the resurgence of new cases in the UK.

EUR/GBP Daily chart

EUR/GBP Finds Support Within Descending Channel, Eyeing 0.8450

But momentum quickly corrected and EUR/GBP was back to its channel pattern, although the pair was struggling to break below 0.85. And once again the Bank of England had delivered, being able to deliver a positive outlook without sparking a hawkish response in the markets, which has seen the Pound strengthen against the Euro. One of the key takeaways from the meeting was the reduction in the threshold set to start reducing asset purchases, brought down to 0.5% from 1.5% as the bank had realised that reducing the balance sheet would likely not happen if the rate was set so high, showing willingness from the central bank to pave the way for changes in monetary policy in the coming months.

On the Euro side, there seems to be a bit more of a split between policy members when it comes to deciding which route to take. Lagarde has been adamant on keeping monetary policy ultra-flexible until the economy is showing meaningful improvement, but there have been some strong dissenters over the last few weeks, with the latest being Jens Weidmann, stating that the ECB must tighten policy to counter inflationary pressures rather than financing costs from eurozone states.

Advertisement

Looking at the chart, EUR/GBP is still finding support along the way despite it being confined to the descending channel. The latest area to halt selling pressure has been 0.8470, which has held since Friday and has managed to give the pair a bit of a bunce higher this morning. The daily candlestick formation so far is showing some indecision on behalf of investors as the body is shortening, leaving tails either side. I would expect 0.85 to act as resistance going forward so buyers are likely to have a tough time to get a meaningful break higher, whilst sellers will have to aim below 0.8470 to get another chance at breaking the lower bound of the channel, with support likely to arise around 0.8450 aswell.

Learn more about the stock market basics here or download our free trading guides.

--- Written by Daniela Sabin Hathorn, Market Analyst

Follow Daniela on Twitter @HathornSabin

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES