EUR/GBP: Policy Split Fuels Bullish Outlook

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 0.85292 and is currently trading around 0.85248.

Joachim Nagel, the Bundesbank President, and Luis de Guindos, Vice President of the ECB, both express a message of careful flexibility for the European Central Bank's (ECBO) monetary policy, emphasizing data dependence and increased caution against inflationary risks. According to Nagel, the ECB has achieved its target of 2% inflation, but due to uncertainties caused by geopolitical events and global trade tensions, it must refrain from making definitive statements on future rate determinations. De Guindos, after a period of robust and aggressive monetary growth, stated that although all policy instruments are still available, the ECB is now more aware of their limitations and potential risks, particularly about financial stability and asset bubbles.

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:  Bullish

Trading Recommendation

It is good to buy on dips around 0.8500 with SL around 0.8480  for a TP of 0.8605.