EUR/GBP waiting for direction ahead of Draghi’s speech on Wednesday
- UK’s Hammond: BoE to reach 2% inflation target within a year.
- EUR/GBP sitting at the 100 DMA unchanged on the day.
EUR/GBP is trading at around 0.8870 virtually unchanged as the pair rebounded from the 0.8850 level early in the US Session.
The British Pound had a boost on Tuesday as UK’s Finance Minister Phillip Hammond presented the Spring Budget statement before the Parliament. He said that he sees continued job growth while the budget deficit would be £10b lower compared with 2010. On inflation he said that the Bank of England should reach its 2% target within a year; pretty hawkish, which was music to the ears for GBP bulls.
The rest of the week will be relatively news-free from the UK while the Eurozone will see ECB’s Draghi and Praet’s speeches on Wednesday at 8.00 and 8.45 GMT respectively. Industrial production and employment change data for the Eurozone is slated at 10.00 GMT on the same day. ECB’s Coeuré will wrap up the day with a speech at 16.15.
EUR/GBP daily chart
Technically the EUR/GBP has found support at the 0.8850 level were it has the 100-period SMA. The next support is seen at 0.8800 which is the cyclical low and the 61.8% Fibonacci retracement from the Jan 25-March 3th move up. To the upside, 0.8900, the 200-period SMA will likely provide resistance, followed by 0.8971 cyclical high. The EUR/GBP pair has been trapped in the 0.8700-0.9000 range since September 2017 so investors should make trading decisions accordingly.