The pound had initially gained ground after the BOE interest rate decision played out as market participants expected. Interest rates held steady at 0.10%. Meanwhile, the central bank’s asset purchase program was increased by 100 billion GBP to 745 billion by end of year.
However, the currency began to weaken during the BOE press conference. BOE Governor Bailey said that the impact of the coronavirus pandemic has not been as bad as they had braced for. With that, he said that the decision to implement negative rates was not imminent but were also not completely off the table.
Consequently, his remarks were widely considered as dovish, weakened the pound, and pushed EURGBP higher.
On the 1-hour time frame, it can be seen that EURGBP broke to the upside of its symmetrical triangle yesterday. When you enroll in our free forex trading course, you will learn that an upside break often means that buyers are dominating trading.
Further affirming this bullish bias is the recent consolidation in the currency pair for the last few trading hours. Because it follows a sharp rally, a bullish pennant chart pattern has formed. It’s also worth pointing out that by drawing the Fibonacci retracement tool from the low of June 17 to the high of June 18, EURGBP is currently finding support at the 23.6% Fib level. Reversal candles around its current price at 0.9020 could mean that there may be enough buyers in the market. The currency pair could soon trade to its near-term resistance at 0.9053 where it topped on May 29.
On the other hand, a strong bearish close below today’s Asian session lows at 0.9011 would invalidate the bullish pennant. Instead, it could mean that there are still sellers in EURGBP that could push it to 0.8985 where it found resistance on June 17.