EURGBP Rally Stalled At 0.9000, What’s Next?

EURGBP retreat today after yesterday’s sharp gains as markets surprised positively after a bigger than expected increase to the PEPP from the ECB. The ECB added an extra 600 billion to its Pandemic Emergency Purchase Program in an attempt to support the coronavirus battered economy. The bonds in the Eurozone and the euro rallied on the news. The pair jumped over 80 pips on the news yesterday confirming the bullish momentum.

ECB President, Christine Lagarde said that GDP is expected to fall by -8.7% in 2020 (revised down by -9.5% from March projections), then rebound by 5.2% in 2021 (revised up by 3.9%) and 3.3% in 2022. Balance of risks is to the downside.

The Euro area activity is expected to rebound in the Q3 as the lockdown measures are eased, supported by favourable financing conditions, an expansionary fiscal policy, and a resumption in global activity.

On the economic data from the UK, today reported that the UK Halifax House Prices came in at -0.2%, beating the expectations of -0.7% in May. The Halifax House Prices yearly reading came in at 2.6% below the consensus of 2.8%.

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EURGBP Price Technical Forecasts  

EURGBP is 0.35% lower at 0.8967, as the pair yesterday reaffirmed the bullish momentum. The technical picture for EURGBP is bullish as long as the pair holds above the major daily moving averages. 

On the upside, initial resistance for EURGBP stands at 0.9004 the daily high. A break above 0.9004 might test the next resistance at 0.9055 the high from May 29th trading session. If the EURGBP pair breaks above, then might challenge the next supply zone at 0.9094 the high from March 27th.

On the other side, the first support for EURGBP stands at 0.8952 the daily low. A close below 0.8952 might challenge the next support area at 0.8875 the low from June 3rd. More support for the EURGBP might emerge at 0.8824 the 50-day moving average.

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