EUR/GBP rallies hard to test 0.8950, ECB decision eyed
- Rally driven by broad GBP sell-off.
- Regains key resistance near 0.8930.
- ECB meeting eagerly awaited.
The EUR/GBP pair extended its vertical rise towards the mid-point of 0.89 handle, now consolidating the heavy gains ahead of the ECB meeting, which is likely to emerge the main risk event today.
EUR/GBP: Sell the rallies on ECB?
After a brief phase of consolidation just ahead of 0.89 handle, the cross in EUR/GBP picked-up solid pace and rallied hard to recover more than 75% of yesterday’s slide.
The latest upsurge in the spot can be mainly attributed to broad-based selling in the pound, as investors resorted to profit-taking after yesterday’s strong UK GDP induced rebound, while a recovery in the US dollar across the board also added to the GBP’s downside.
On the EUR-side of the equation, the EUR/USD pair shaved-off gains and reverted to 1.18 handle amid increased nervousness ahead of the ECB QE tapering announcement, which appears to keep further upside limited in EUR/GBP.
Meanwhile, the cross ignored the German consumer climate and Spanish employment numbers, as all eyes remain on the ECB decision for fresh direction.
EUR/GBP Technical View
To the upside, resistances are aligned at 0.8970 (100-DMA), 0.9000 (round number) and 0.9016 (classic R2/ Fib R3). The downside remains guarded by 0.8919 (daily pivot), below which 0.8880 (Oct 25 low) will be tested, opening doors for a test of 0.8795 (200-DMA).