Important technical developments on the EUR to GBP exchange rate imply further weakness ahead. The cross broke lower from an upward channel that contained the price action in the last six months. Moreover, the new U.S. administration will likely push for a trade deal with the European Union, a positive development for the GBP traders.
Furthermore, the Bank of England already eased the monetary policy further last week. It expanded the quantitative easing program by another GBP150 billion, while the ECB is yet to deliver its next move.
However, despite the easing, the GBP is one of the top performers on the currency dashboard as investors prepare to focus on the geopolitical aspects rather than monetary ones. Further in the trading week, the Bank of England’s Governor is scheduled to speak at the ECB Forum on Central Banking, so that might push the GBP even higher.
Better Than Expected UK Jobs Data
Today’s employment data in the United Kingdom represented the catalyst for the EUR to GBP exchange rate to break lower. The Claimant Count Change improved (-29.8k on expected 20.3k), and even the average earnings index rose to 1.3% from 0.1% previously. It was enough for investors to pus the cross lower, now trading below the 0.89 after hovering around 0.90 for months.
EUR to GBP Bearish Break
The bearish break opens the gates for further downside. If we use the measured move given by the rectangular consolidation, then the EURGBP cross bears may want to stay on the short side until 0.8700. In this case, the invalidation level would come at 0.9250. Moreover, by the time the 0.87 comes, a wise move for bears would be to lower the stop to break-even and wait for the full retracement of the 0.83-0.95 move triggered at the start of the pandemic. While it may take some time, the risk-reward ratio favors a strong comeback for the GBP towards the end of the trading year.
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EUR to GBP Price Forecast
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