- The Euro hits resistance at 0.8855 after rallying to fresh two-month highs.
- The Pound remains vulnerable on BoE's dovishness.
- EUR/GBP seen at 0.85 in one year time – Danske bank.
The Euro rally from 0.8800 seen on Tuesday’s European market session, has found resistance at 0.8855. The pair, however, remains steady at two-month highs, above 0.8830, with mid-October’s peak, at 08865 on sight.
The Pound, on the defensive on the back of a dovish BoE
The Sterling has remained on the back foot over the last few days, which has helped the Euro to appreciate nearly 3% over the last two weeks. The Bank of England delivered a “dovish hike” after their December monetary policy meeting, which has acted as a headwind for the GBP.
The bank slowed down the monetary tightening pace with a 0.5% hike and with two of the nine committee members voting to leave rates unchanged. This suggests that the bank’s normalization cycle might be approaching its end.
In a quiet post-Christmas market, with a thin macroeconomic docket, the euro is trading moderately higher, underpinned by a solid EUR/USD amid the softer tone of the US Dollar. News that China is planning to end quarantine for inbound travelers has boosted risk appetite, weighing demand for the safe-haven USD.
EUR/GBP seen lower over the coming months – Danske Bank
Looking forward, analysts at Danske Bank maintain a negative outlook on the pair: “We remain cautiously optimistic that the cross will head modestly lower as a global growth slowdown and the relative appeal of UK assets to investors are positive for GBP relative to EUR (…) Forecast: 0.87 (1M), 0.86 (3M), 0.85 (6M), 0.85 (12M).”
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD regained the smile…and the 200-day SMA
AUD/USD added to the positive start to the week and extended its bullish performance, surpassing the 0.6600 barrier and putting the critical 200-day SMA to the test.
EUR/USD rallies on Greenback weakness heading into US presidential election
EUR/USD benefited from a broad-market decline in the US Dollar as global markets brace for early polling outcomes from the US presidential election that kicked off on Tuesday. Fiber jumped two-thirds of one percent to claw back above the 1.0900 handle as investors hope for a market-positive outcome.
Gold gleams US election fears and soft US Dollar boosts prices
Gold prices increased during the New York session as Americans kept going to the polls amidst one of the closest of the US presidential elections this century. Risk appetite has improved, yet the golden metal post gains of over 0.22% due to uncertainty linked to election jitters and the Middle East.
XRP could rise to $0.5608 despite weak on-chain data
Ripple's XRP is trading near $0.5140 on Tuesday following declines in several of its on-chain data, which indicates declining investor interest. The remittance-based token could rally toward $0.5608 after crossing above the upper trendline resistance of a symmetry triangle.
US election day – A traders’ guide
Election day volatility: Brace for potential wild market swings. Election days bring opportunities, but also risks. Unclear results can increase volatility further.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.