- EUR/GBP is built a cushion around 0.8900 amid rising odds of a steady BoE policy.
- A breakout of the Descending Triangle has already underpinned the Euro against the Pound Sterling.
- Upside momentum is still active as the RSI (14) has not surrendered the bullish range yet.
The EUR/GBP pair has gauged an intermediate cushion around 0.8900 in the Asian session. The cross has been consolidating in a 20-pip range from the past two trading sessions. The upside bias for the pair looks favored as expectations for a steady Bank of England (BoE) monetary policy are solidifying.
A forecast from the British Chambers of Commerce (BCC) that “The country's economy is on track to shrink less than expected this year and avoid two quarters of negative growth which mark a technical recession,” reported by Reuters, is bolstering the fact that the BoE could consider a halt in the policy-tightening spree.
Also, BoE policymaker Swati Dhingra warned on Wednesday “Overtightening poses a more material risk at this point.” A pause in BoE’s policy restriction might have a negative impact on the Pound Sterling.
Meanwhile, the European Central Bank (ECB) is set on its path of contracting monetary policy as expectations of a rebound in Eurozone inflation are improving.
On a four-hour scale, the cross has delivered a breakout of the Descending triangle chart pattern, which indicates an expansion in volatility after a sheer squeeze in the same. The downward-sloping trendline of the chart pattern is plotted from February 03 high at 0.8979 while the horizontal support is placed from January 30 low at 0.8766.
The 20-period Exponential Moving Average (EMA) at 0.8893 is providing a cushion to the Euro bulls.
Meanwhile, the Relative Strength Index (RSI) (14) has not surrendered the bullish range of 60.00-80.00 yet, which indicates that the upside momentum is still active.
Should the cross breaks above February 17 high at 0.8929, Euro bulls will drive the asset towards February 3 high at 0.8979 followed by the psychological support at 0.9000.
On the flip side, a breakdown below February 14 low at 0.8804 will expose the asset to January 29 low at 0.8763 and January 19 low at 0.8722.
EUR/GBP four-hour chart
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