EUR/GBP Eyes Upside: ECB's Rate Cut Uncertainty Fuels Policy Gap

EURGBP holds above 0.8500 on policy divergence between BOE and ECB. Intraday bias remains bullish as long as support 0.8450 holds. It hit an intraday high of 0.85278 and is currently trading around 0.85276.

A fall in market expectations for a European Central Bank (ECB) rate cut in September has been observed, with the probability falling to about 50% from 60% earlier. In June, the ECB's decision to cut rates was followed by swap markets and analysts who now believe that the move could be the final or even final step in the current easing cycle. According to recent statements from ECB policymakers, the latter is favoring a data-driven, meeting-by-meeting approach, indicating that there will be no immediate action for further cuts and unless significant economic changes occur this summer, which could result in ice weather. Despite concerns about the speed of future quantitativeeasing, this cautious outlook has led to a market consensus that any rate cut in September is now just 'a coin flip.

Technical Analysis

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

Bearish Trend Confirmation: Any break below 0.8480 confirms an intraday bearish trend. A drop to 0.84425/0.8400/0.8378/0.8340/0.8300 is likely.

Near-Term Resistance:  The near -term resistance is around 0.8550. Any violation above will take the pair to 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 buy on dips around 0.8500 with SL around 0.8480  for a TP of 0.8605.