FxWirePro: EUR/GBP trades in narrow range, BoE policy decision awaited

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.