- EUR / GBP gains strong traction on Thursday and breaks a three-day losing streak.
- GBP bulls remain on the defensive ahead of the Bank of England decision and Scottish elections.
- Selling around the USD and bullish eurozone retail sales benefit the euro and support the EUR / GBP slide.
The crossing EUR/GBP has continued to move higher during the first half of Thursday’s European session and has soared to new daily highs around the 0.8660-65 region in the last hour.
The cross has halted its recent strong retracement, from the 0.8715-20 resistance zone, and gained strong positive traction on Thursday, breaking three consecutive days of losing streak. The strong bullish move is due to the relatively underperformance of the British pound ahead of key event risks such as the Bank of England’s monetary policy decision and the Scottish elections.
The Bank of England is expected to keep its monetary policy setup unchanged at the end of the May meeting. The announcement will be accompanied by updated economic projections, which could instill some volatility in the British pound. Apart from this, the uncertainty about the outcome of the Scottish parliament elections It has acted as a headwind for the British pound.
On the other hand, the common currency has benefited from the emergence of new sales around the US dollar and has been supported by upbeat macroeconomic data from the euro zone. According to Eurostat, Retail sales in the region increased 2.7% month-on-month and 12% year-on-year in March. The readings were better than consensus estimates that point to growth of 1.5% and 9.6%, respectively.
However, it remains to be seen whether the bulls can capitalize on the move to the upside or whether the EUR / GBP cross meets fresh selling at higher levels. A more optimistic BoE should provide a strong boost to the British pound and limit gains on EUR / GBPSo it is prudent to wait for some continuation buying before positioning yourself for the resumption of the recent rally from lows of more than a year.
EUR / GBP technical levels
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