 EUR/GBP fell to fresh weekly lows in the 0.8330s on Thursday, with bears eyeing a retest of recent multi-year lows printed last week just under 0.8310 and a push lower towards the late-2019/early-2020 lows in the 0.8280 area. Risk appetite took a knock on Wednesday after a hawkish Fed policy meeting where the bank teed up the prospect of multiple rate hikes in 2022 and Fed Chair Jerome Powell refused to rule out a 50bps move in March. Normally, that might push EUR/GBP higher given sterling’s higher beta to broad risk appetite, but the Fed meeting appears to have encouraged FX markets to trade more on central bank policy divergence. 

EUR/GBP eases to 0.8365 amid an inactive trading session during early Wednesday morning in Europe.

Even so, the cross-currency pair remains inside a nearby trading range between 50-HMA and a three-day-old ascending support line, respectively around 0.8380 and 0.8360.

Given the steady RSI line, the latest sideways performance is likely to extend.

However, a one-week-old horizontal line adds strength to the 0.8380 resistance, making it harder to cross.

On the contrary, a downside break of 0.8360 will need validation from the 200-HMA level of 0.8352 before directing EUR/GBP bears towards the monthly low of 0.8305, also the lowest level since February 2020.

If at all the pair stays bearish below 0.8305, the 0.8300 round figure will probe the sellers before directing them to a February 2020 low of 0.8282.

It’s worth noting that the EUR/GBP upside past 0.8380 will propel it towards the 0.8400 threshold and then to the monthly peak of 0.8422.

EURGBP Expected to Trade SIdeways

Jan 27 2022