- Euro appreciates for the third day in a row and tests three-week highs at 0.8780.
- The dovish rhetoric from the BOE has increased the downward pressure on the pound.
- EURGBP – Breakout of 0.8780 resistance would reverse the downtrend from late September highs.
The EUR appreciates against the pound for the third day in a row, extending its rebound from weekly lows at 0.8590 to test Oct 21 high at 0.8780 which is holding firm for now.
Dovish BOE and gloomy economic outlook hurt sterling
The British pound has been trading under strong downward pressure this week, which has helped the EURGBP rally by almost 2.4%, due to the dovish message from the Bank of England and the gloomy economic outlook ahead for the UK.
On Thursday, BoE Chairman Andrew Bailey pushed the pound lower during the post-policy decision press release, despite the bank’s previously announced 0.75% hike. Bailey noted that rates will be softer in the coming months and warned that the country may already have entered a recession that could last two years and cause an economic contraction of 2.9%.
EURGBP pushes the 0.8780 resistance zone
From a technical point of view, EURGBP bulls gained traction on Friday after confirmation above the 50-day SMA at 0.8700, which now acts as support to attempt an assault on Oct 21 high at 0.8780.
Above here, the pair would have canceled the downtrend from the late September highs, opening the way towards 0.8965 (Oct 12 high) and the psychological level of 0.9000.
To the downside, immediate support is found at the aforementioned 50-day SMA at 0.8700 with next targets below there at 0.8650 (Oct 27 high) and 0.8570 (Oct 28-31 lows).
Technical levels to watch
|last price today||0.8777|
|daily change today||0.0046|
|Today’s daily variation in %||0.53|
|Daily opening today||0.8731|
|Previous daily high||0.8743|
|Previous Daily Low||0.8608|
|Previous Weekly High||0.8764|
|Previous Weekly Low||0.8572|
|Previous Monthly High||0.8867|
|Previous Monthly Low||0.8572|
|Daily Fibonacci of 38.2%||0.8692|
|Daily Fibonacci of 61.8%||0.866|
|Daily Pivot Point S1||0.8645|
|Daily Pivot Point S2||0.8559|
|Daily Pivot Point S3||0.851|
|Daily Pivot Point R1||0.878|
|Daily Pivot Point R2||0.8829|
|Daily Pivot Point R3||0.8915|
Source: Fx Street