English
Study of the EUR/GBP Price: Volatility Declines Ahead of UK/Eurozone PMIs
Prior to the release of the UK/Eurozone PMIs, the EUR/GBP exchange rate is exhibiting a trend of contracting volatility. ECB Rehn anticipates additional rate hikes after March and believes the Eurozone will avoid recession. If inflation is still in double digits, a pause in policy tightening could cause problems for the Bank of England (BoE).
During the Tokyo session, the EUR/GBP pair is exhibiting a sideways auction in a restricted band of 0.8870 to 0.8890. As investors await the release of the preliminary PMI statistics for the Eurozone and the United Kingdom for more momentum, the cross has turned sideways.
The street anticipates a break in the policy tightening cycle in light of the fact that economic activity in the United Kingdom region is slowing as a result of the Bank of England's (BoE) substantial interest rate hikes. As inflation figures remain in double digits, this could cause problems for the BoE.
In the meantime, inflation in the Eurozone is decreasing significantly but remains well below the target percent. Olli Rehn, a member of the Governing Council of the European Central Bank (ECB), was quoted by Reuters as saying, "It would be acceptable for the European Central Bank to raise rates beyond March and reach the terminal rate this summer." In addition, he stated that the Eurozone may avoid recession and that growth will be approximately 1%.
EUR/GBP is auctioning in a Symmetrical Triangle chart pattern that implies a sheer decrease in volatility, which is followed by a breakout in the same. The downward-sloping trendline of the above-mentioned chart pattern is put from February 3 high at 0.8979 while the upward-sloping trendline is placed from January 19 low at 0.8722.
The 20-period Exponential Moving Average (EMA) at 0.8880 is overlapping on the asset price, which suggests indecisiveness in the sentiment of the market players.
Meanwhile, the Relative Strength Index (RSI) (14) oscillates between 40.00 and 60.00, indicating a mediocre future performance.
If the cross breaks above the high of February 17 at 0.8929, Euro bulls will push the asset toward the high of February 3 at 0.8979, followed by the psychological support at 0.9000.
On the other side, a breakdown below February 14 low at 0.8804 will expose the asset to January 29 low at 0.8763 and January 19 low at 0.8722.
Bonus rebate to help investors grow in the trading world!
