- EUR/GBP moves lower on Thursday and breaks a four-day winning streak to a multi-week high.
- The pullback could only be attributed to some repositioning operations ahead of the ECB’s monetary policy meeting.
- Investors will also keep a close eye on further developments surrounding the conflict between Russia and Ukraine.
The crossing EUR/GBP remains on the defensive during the European session on Thursday, moving lower and remaining under pressure near the daily low just below the 0.8400 level.
The cross moved lower on Thursday and moved away from the four-week high touched on the previous dayhalting this week’s massive move up from the 0.8200 level, or the lowest level since June 2016. Today’s pullback lacked an obvious catalyst and could only be attributed to some change in position before the key meeting of the European Central Bank (ECB).
However, the decline seemed limited amid the revival of hopes for a diplomatic resolution to end the war in Ukraine. Given their geographical proximity, the optimism helped ease concerns that the European economy would suffer the most from the contagion effects of the Ukraine crisis. This should act as a tailwind for the common currency and the EUR/GBP cross.
On the other hand, the appearance of some purchases around the US dollar weighed on the British pound. This could further help limit any significant corrective decline for the EUR/GBP cross. However, for now it seems that EUR/GBP has broken four consecutive days of winning streak as investors await the latest ECB monetary policy decision for a fresh boost.
Recent geopolitical events could do little to force the ECB to change its optimistic stance. amid record consumer inflation. This, in turn, suggests that the path of least resistance for the EUR/GBP cross remains to the upside. That said, the risk of further escalation of tensions between Russia and the West warrants some caution for bulls.
EUR/GBP technical levels
Source: Fx Street
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