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Talking Points:
- EUR/GBP Technical Strategy: Flat
- Euro drops to two-week low vs. British Pound after BOE rate decision
- Waiting for improved risk/reward, chart setup to consider taking trade
The Euro declined against the British Pound, falling to the lowest level in two weeks following the Bank of England monetary policy announcement. Mark Carney and company opted against a rate cut but Sterling behaved counter-intuitively, as expected.
Near-term support is at 0.8234, the 38.2% Fibonacci retracement, with a break below that opening the door for a test of the 0.8113-17 area (50% level, April 7 high). Alternatively, a rebound above the July 14 swing top at 0.8470 paves the way for a challenge of the July 6 peak at 0.8627.
Prices are too close to near-term support to justify entering short from a risk/reward perspective. On the other hand, the absence of a clearly defined bullish reversal signal argues against taking up the long side. With that in mind, opting to remain on the sidelines seems most attractive for the time being.
