EUR/GBP Forecast: Bearish Trend Continues Amid Economic Uncertainty

EURGBP showed a minor sell-off on policy divergence between ECB and BOE. Intraday  bias  remains bearish  as long as resistance 0.8500 holds. It hits an  intraday low  of 0.83801 and is currently trading around 0.83924.

A cautious monetary policy is being adopted by the BoE, which is expected to decrease its Bank Rate target to around 4.25% due to fears of increased international trade tensions and potential downside risks to UK economic growth. This cautious stance is due to inflation falling short of expectations, decreasing energy costs, and moderate wage growth, while some policymakers advocate for more substantial reductions. Although the BoE is signaling a scalable and carefully chosen' approach to future rate cuts, it is expected that these quarterly reductions could see the Bank Rate fall as low as 3.75% by the end of the year, with lower UK yield being blamed on Jeremy Benson and weakened sterling respectively.

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 0.8420. Any violation above will take the pair to 0.8460/0.8500/0.8550/0.8605/ 0.8660/0.8765/0.8800.

Indicator Analysis (4-hour chart)

• CCI (50): Bearish
   
• Average Directional Movement Index:  Bearish

Trading Recommendation

It is good to sell on rallies around 0.84250 with SL around 0.8465  for a TP of 0.8300.