FxWirePro: EUR/GBP capped below 21-EMA, GBP braces for BoE policy meet next week

Chart - Courtesy Trading View 

EUR/GBP was trading largely unchanged at 0.8622 at around 10:10 GMT, outlook neutral.

The pair is extending sideways, finds strong resistance at 21-EMA, decisive break above required for upside continuation.

The British pound braces for the Bank of England’s (BOE) hawkish move during its next week’s monetary policy. 

A Reuters poll stated that the BoE will announce another 50 basis points to hike next week, taking the borrowing costs to 3.50%.

The central bank is set for rate hike despite the economy falling into recession, as it battles inflation running at more than five times its target.

Next week's release of the UK inflation figures will also remain in the spotlight, rampant food price inflation could trigger upside momentum in overall inflation.

Expectations of a hawkish BoE along with easing of financial services rules for London adds strength to the pound, adding downside pressure on the pair.

Major Support Levels: 

S1: 0.8613 (converging 5-DMA and 200H MA)

S2: 0.8543 (200-DMA)

Major Resistance Levels: 

R1: 0.8638 (21-EMA)

R2: 0.8657 (55-EMA)

Summary: EUR/GBP is currently set to extend sideways grind. A hawkish BoE will provide a clear direction. Dip till 200-DMA support likely.