Policy Divergence Drama: EUR/GBP Wobbles as ECB Holds While Markets Eye BoE

EURGBP gained slightly after the ECB policy decision. Intraday bias remains bullish as long as support  0.8600 holds. It hits an intraday low of 0.86352 and is currently trading around 0.86580.

Main interest rates were left unchanged by the European Central Bank on Thursday, maintaining the deposit facility rate at 2.00% and pointing toward possible fulfillment of its easing cycle after eight straight cuts since June 2024. This decision shows increasing faith in the economic resilience of the eurozone; manufacturing PMI is back to expansionary territory for the first time in more than three years. Solid private consumption momentum notwithstanding inflation at 2.1%, somewhat above the 2% target. While money markets price less than even odds, President Christine Lagarde is likely to keep the ECB's data-dependent approach without committing to any future rate paths. for yet another cut before 2026, indicating the central bank may have reached the bottom of this cycle.

Technical Analysis

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

Bearish Trend Confirmation: Any break below 0.86350 confirms an intraday bearish trend. A drop to 0.8600/0.8560/0.8520/0.8480 is likely.

Near-Term Resistance:  The near-term resistance is around 0.8670. Any violation above will take the pair to 0.8725/0.8750/0.8800/0.8850.

Indicator Analysis (4-hour chart)

CCI (50): Bearish

Average Directional Movement Index:  Bearish

Trading Recommendation

It is good to buy on dips around 0.86350 with SL around 0.8600 for a TP of 0.8725.