The EUR/GBP pair headed lower for a second day after the European Central Bank (ECB) kept rates unchanged and re-emphasized its dovish message of leaving the PEPP intact until “the coronavirus crisis phase is over”. With the delta variant of the coronavirus cropping up in several countries, traders would be looking towards the September ECB meeting to see if the bank will raise purchases or not-a Euro dovish event.
The ECB also reiterated that it would continue its asset purchase program “for as long as necessary” and would end before it would start raising the key ECB rates.
Despite the rise in Eurozone inflation by 1.9% in June than a year earlier, the bank projects inflation to drop to 1.5% in 2022, which takes any pressure of interest rate increases away.
The EUR/GBP pair is trading 0.15% lower as of writing.
Technical Levels to Watch
Having breached the 0.85962 price support earlier in the day, bears would need to see the active daily candle close below it via a 3% penetration to confirm the breakdown. This move would line up 0.85372 as the next target, followed by 0.85043 and 0.84883. If the latter is taken out, then the price could be on its way to lows, last seen on 12 February 2020 at 0.83932.
On the other hand, a break above the 0.85952 resistance puts the channel’s upper border at risk. If this channel gives way, then 0.86811 becomes the new resistance target. A continued advance targets 0.87215, with 0.87514 and 0.87967 serving as additional targets to the north.