EUR/GBP: ECB Rate Cut Sparks Volatility – Bears Eye 0.8300

EURGBP gained sharply after the ECB 25 bpbs rate cut. Intraday bias remains bearish as long as resistance 0.8500 holds. It hit an intraday low of 0.83773 and is currently trading around 0.83818.

The ECB announced a widely anticipated 25 basis point cut to its three key interest rates, reducing the deposit facility rate to 2.00%, citing its updated assessment of the inflation outlook and effective monetary policy transmission, while also revising inflation forecasts downward. Although acknowledging controlled inflation, the ECB expressed increased caution regarding economic growth and potential trade tensions, maintaining a data-dependent policy stance with some members suggesting a possible pause in July before further rate cuts. Today’s decision lowers rates to what the ECB considers a “neutral” level, balancing confidence in disinflation with caution about the Eurozone's growth and external risks

Technical Analysis

The pair is currently trading below  55 and 200- EMA and below 365-EMA on the 4-hour chart.

Bearish Trend Confirmation: Any break below 0.83780 confirms an intraday bearish trend. A drop to 0.8340/0.8300 is likely.

Near-Term Resistance:  The near-term resistance is around 0.8500. Any violation above will take the pair to 0.8550/0.8605/ 0.8660/0.8765/0.8800.

Indicator Analysis (4-hour chart)

• CCI (50): Bullish
• Average Directional Movement Index:  Neutral

Trading Recommendation

It is good to sell on rallies around 0.8448-50 with SL around 0.8500  for a TP of 0.8300.