EURGBP initially traded higher during the London session yesterday when the ECB kept its monetary policy unchanged. The currency pair traded higher to peak at 0.9094 before trading lower to hit an intraday low of 0.9055 before finishing the day at 0.9066. As of this writing, EURGBP is facing some selling pressure as it trades at 0.9059, down 7 pips from its opening price.
As reported by my colleague Crispus Nyaga yesterday, the ECB kept its interest rates unchanged at 0.00%. Policymakers also kept its asset purchase program steady which means that it would continue to buy up to 1.35 trillion EUR of debt until June of next year.
Today, the market’s focus will be on the special 2-day summit by EU leaders. The top thing on the agenda is how to spend the 750 billion EUR fund that the bloc has set aside for the region’s recovery from the pandemic. It was initially proposed that 500 billion will be given as grants and 250 billion will be issued as loans. However, Austria, Sweden, Denmark, and the Netherlands would rather have most of the funds be issued as loans rather than grants. They have since been known as the “frugal four.”
Should European leaders be able to come to an agreement, EURGBP could trade higher. On the other hand, if the bloc ends with a stalemate, the currency pair could trade lower.
Technical Analysis
On the 4-hour time frame, it can be seen that EURGBP got rejected at the area around the 0.9100 handle twice. Consequently, a double top chart pattern could potentially be in the works. When you enroll to our free forex trading course, you will learn that this is widely considered as a bearish reversal indicator. If there are enough sellers to push EURGBP to yesterday’s low at 0.9043, the double top will have been completed. A strong close below this price could trigger a bigger sell-off on EURGBP. It may soon fall to its July 13 lows at 0.8941.
On the other hand, a strong close above yesterday’s high at 0.9094 could invalidate the chart pattern. It could then signal a potential to rally to near-term highs at 0.9111 where EURGBP topped on July 14.
EURGBP, 4-Hour Chart
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