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November 6th - ING analysts stated that the pound is likely to remain weak, but a significant drop from current levels is unlikely in the short term. They pointed out that with the market recently raising its expectations for interest rate cuts, the Bank of Englands easing cycle has been largely priced in, suggesting that the terminal interest rate could be as low as 3.25% next summer. Analysts said, "Unless the budget includes significant fiscal tightening, further lowering the price-cutting cycle for the Bank of England, a credible budget might be sufficient to slightly reduce the risk premium in UK government bonds and the pound." ING expects the euro to remain around 0.88 against the pound before the budget announcement on November 26th.A U.S. federal appeals court has given Trump a new opportunity to present evidence again that the hush money criminal case should fall under the jurisdiction of a federal court.On November 6th, TD Securities strategists stated in a report that the pound is expected to underperform other G10 currencies as the UK budget meeting on November 26th approaches. The strategists pointed out that the UKs fiscal maneuvering space is extremely limited, and the dollar is likely to maintain its recent strength for some time during the ongoing US government shutdown. The report stated, "The pound appears structurally undervalued around the 1.30 level, but a reversal in dollar sentiment is needed for it to strengthen again after the budget risk event." A catalyst for a weaker dollar could be the end of the US government shutdown and the resumption of official economic data releases, which could signal a potential Fed rate cut in December.The German DAX index fell by 1% during the day.U.S. stocks opened lower and continued to decline, with the Nasdaq falling by 1%, the S&P 500 down 0.68%, and the Dow Jones down 0.65%.

EUR/GBP Price Analysis: Breakout of the Flag Indicates Potential for New Upward Movement

Daniel Rogers

Jan 11, 2023 12:00

EUR:GBP.png 

 

During the Asian session, the EUR/GBP pair is behaving erratically below the crucial barrier of 0.8840. The cross trades aimlessly due to the absence of a potential stimulus. In the meantime, it is predicted that the European Central Bank (ECB) will cease its policy tightening, as Mario Centeno, a member of the ECB's governing council, stated that Eurozone inflation may find stiff opposition in January and February, but will begin to decrease in March.

 

EUR/GBP is forming a Bullish Flag chart pattern on a four-hour time frame, which indicates consolidation followed by a breakout. Participants typically initiate long positions during the consolidation period of a chart pattern, preferring to enter an auction once a bullish bias has been established.

 

Near 0.8820, the 50-period Exponential Moving Average (EMA) has moved sideways, suggesting continued consolidation. While the 200-day exponential moving average (EMA) is still climbing, a bullish long-term trend is indicated.

 

The Relative Strength Index (RSI) (14) fluctuates between 40.00 and 60.00 in the interim. It indicates that a probable conviction move trigger is not present.

 

A breach of the January 6 high at 0.8871 will accelerate the asset towards the round-number barrier at 0.8900, followed by the September 29 high at 0.8979.

 

In comparison, a decline below Monday's low of 0.8769 will lead to the asset's December 21 low of 0.8716. A fall in the latter will cause the asset to reach a low of 0.8691 on December 19.


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