- Post-ECB selling around the euro helped the EUR / GBP rebound away from 0.9000.
- The intraday recovery move attempt faltered near a downtrend line resistance.
The EUR / GBP cross rose more than 50 pips from the two-week lows and updated the daily highs, around the 0.9060 region in the last hour, although it quickly lost a few pips thereafter.
The cross once again managed to find decent support near the key psychological level 0.9000 and gained some intraday traction after the ECB’s decision on Thursday. As anticipated, the European Central Bank left intact its main financing operations, the marginal credit facility and the deposit facility at 0%, 0.25% and -0.5%, respectively.
In addition, the central bank left its Pandemic Emergency Purchase Program (PEPP) unchanged at 1.35 trillion euros ($ 1.6 trillion) and reiterated that it will operate until at least June 2021. In the accompanying statement, the ECB gave a strong indication that it will. it will probably boost its emergency bond purchase program to stabilize the euro area economy.
At the press conference after the meeting, ECB President Christine Lagarde said that the Governing Council agreed to take action and recalibrate its policy at the next policy meeting in December. Lagarde added that inflation is expected to remain negative until early next year and that short-term prospects have deteriorated.
The ECB’s dovish outlook and the commitment to take action in December hit the shared currency and helped the EUR / GBP rebound from lows. However, the tone offered around the British pound, amid lingering Brexit uncertainties and a broad-based USD strength, limited the upside, rather fueling some higher selling.
From a technical perspective, the intraday recovery movement stalled near resistance marked by a one-week downtrend line. This, coupled with strong horizontal support near 0.9000, constitutes the formation of a descending triangle, which warrants some caution for bullish traders and positioning for any significant positive moves.
Credits: Forex Street
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