The EUR/GBP cross pair remains under tremendous pressure a few hours ahead of the Bank of England’s decision. After it formed a double top in the last days of 2020, the pair started a steady decline, one that looks poised to continue.
We are still yet to see the economic impact of Brexit, but we do see the difference between the vaccination campaigns in the United Kingdom and the rest of the European countries. The sharp difference, in favor of the U.K., will likely create a gap between the economic output in the two regions, to the benefit of the pound and to the detriment of the euro.
The Bank of England today will reiterate the difficult times ahead and the hope brought by the vaccination campaign, but it is not expected to do much more than that. As such, the pound may continue to strengthen against the euro.
EUR/GBP Technical Analysis
A huge descending triangle forms on the 4h timeframe. A break below the horizontal line triggers more downside, as traders will begin targeting the measured move seen at 0.84 and below. Therefore, bears may want to add to the downside on a break below the horizontal support, targeting the measured move. The invalidation level comes at 0.8650, just shy above the most recent lower high.