Chart - Courtesy Trading View
EUR/GBP was trading 0.03% higher on the day at 0.8848 at around 05:45 GMT, poised for further gains.
Pound Sterling is likely to remain solid as the Bank of England (BoE) is set to hike rates for the eleventh consecutive time.
A 25 basis point (bp) interest rate hike is now a done deal as UK’s inflation has been lifted higher by soaring prices of food and non-alcoholic drinks and higher energy costs.
UK consumer price inflation (CPI) rose to 10.4% in February from January's 10.1%, almost back to where it was in December.
At above 10%, the UK's rate of inflation is more than five times the BoE's target rate of 2%.
Core inflation, which strips out food and energy, rose by 6.2% in the said month, far above the median forecast at 5.7%.
Persistent price pressures along with the ongoing global banking turmoil is likely to make the BoE decision a tough one.
Technical Analysis:
- EUR/GBP is consolidating break above 55-EMA
- The pair trades shy of daily cloud top, holds above major moving averages
- Momentum is bullish, stochs and RSI are biased higher
- MACD is on verge of bullish crossover on signal line
Major Support Levels:
S1: 0.8820 (21-EMA)
S2: 0.8797 (5-DMA)
Major Resistance Levels:
R1: 0.8869 (Cloud top)
R2: 0.8895 (Trendline)
Summary: EUR/GBP trades muted ahead of BoE policy decision. Technical bias is bullish. Scope for test of trendline resistance at 0.8895.
