EURGBP Steady Ahead of ECB Interest Rate Fireworks
EURGBP is trading 0.23% lower in the morning session but the European Central Bank meeting later could light the fuse for the pair. The pound is stronger as Europe moves to strict virus lockdowns.
The surge in virus cases has unfortunately seen France and Germany choose the lockdown route once more. France will impose a new four-week lockdown while Germany has also announced strict measures but will not confine people to their homes for now. The move to new lockdowns has hit stocks and commodities as investors price-in lower economic growth and slower demand in an already fragile economic recovery.
Today’s big event will be the European Central Bank announcement on interest rates. The bank is expected to keep rates at 0% with a -0.5% deposit rate but the bank has been critical of a strong euro, which has created sluggish inflation so a surprise cut is still possible. More likely would be statements in the press conference that confirm further stimulus measures. This was on the table before the recent virus cases and lockdowns and it could see a weaker euro.
On Brexit there is renewed hope for a deal as the two sides draft a text which includes the troublesome state aid issue. There are still hurdles to a deal but time is running out with only two months left until the U.K.’s planned economic exit from the EU. Talks need to be finalized early enough to create the legal texts necessary.
EURGBP Technical Outlook
EURGBP is trading near support at 0.9020. The pair has been on a downward trend from a September high and today could see a larger trend develop. Traders should go with today’s close. A close below the 0.9000 will look to target 0.8870. A strong bullish day could see the pair move back towards 0.9150. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.