EURGBP: Policy Divergence Fuels Bullish Momentum Amidst Anticipated BOE Rate Cut

EURGBP gained sharply on policy divergence between the BOE and ECB. Intraday bias remains bullish as long as support 0.8600 holds. It hits an intraday high of 0.867522 and is currently trading around 0.86680.

Speculation is growing that at the next Monetary Policy Committee (MPC) meeting on August 7, 2025, the Bank of England (BoE) will lower its Bank Rate from 4. 25% to 4. 00%. Driven by a cooling UK labor market—unemployment reaching a nearly four-year high of 4. 6%—and despite a recent surprise increase to 3. 6% in June, market sentiment indicates easing inflation pressures, hence driving this expected cut, maybe followed by another in November. Though he favors a phased approach, Governor Andrew Bailey has signaled a readiness for more significant cuts should economic data justify them. The MPC remains divided, with certain members already voting for a cut. Reflected in rate swap pricing, market expectations very strongly support an August cut and additional easing into 2026 should inflation moderate and economic expansion remain subdued.

Technical Analysis

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

Bearish Trend Confirmation: Any break below 0.8598 confirms an intraday bearish trend. A drop to 0.8560/0.8520/0.8480 is likely. Near-term support is around 0.8630.

Near-Term Resistance:  The near-term resistance is around 0.86750. Any violation above will take the pair to 0.8700/0.8765/0.8800.

Indicator Analysis (4-hour chart)

CCI (50): Bearish

Average Directional Movement Index:  Neutral

Trading Recommendation

It  is good to buy on dips around 0.8648-50 with SL around 0.8600  for a TP of 0.8800.

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