Temporary EUR/GBP Rebound Ahead of ECB Meeting
Market Overview
On Thursday, the EUR/GBP pair showed signs of temporary strength, recovering from its lowest levels since March 2022. This comes as the European Central Bank (ECB) prepares to cut interest rates by an additional 25 basis points for the fourth consecutive time. While this rate reduction has been fully priced into the market, its implications continue to shape investor sentiment, creating a short-lived upward correction for the euro against the pound. The backdrop of declining eurozone inflation and heightened global uncertainty provides further context for these movements.
Technical Analysis
On the 30-minute chart, EUR/GBP has entered a corrective phase after forming a bullish divergence with the Relative Strength Index (RSI). This divergence, coupled with a break above the immediate resistance at 0.82351, indicates a potential short-term recovery. If bullish momentum persists, buyers are likely to test the next resistance levels at 0.82404 and, subsequently, 0.82436. These levels correspond to the Fibonacci retracement zones, which are critical for assessing the strength of this corrective move.
Oscillators Confirmation
Momentum indicators support this outlook, with the RSI positioned in bullish territory and showing an upward trajectory. Meanwhile, the MACD has shifted to a positive zone, although the mixed alignment of moving averages suggests the rally may face resistance at higher levels. The sustainability of this recovery will depend on the euro’s ability to maintain momentum above its immediate support levels.
Alternative Scenario
Conversely, a failure to sustain this upward trajectory could see sellers regain control, driving the pair lower. The first critical support lies at 0.82266, a breach of which would invalidate the current bullish scenario and potentially resume the broader downtrend. Further downside targets include the support levels at 0.82319 and 0.82266.
Key Levels
- Resistance Levels: 0.82404, 0.82436
- Support Levels: 0.82351, 0.82319, 0.82266
Key Events to Watch
The ECB’s policy decision dominates Thursday’s economic calendar. Markets anticipate a 25 basis-point rate cut, which could influence the pair’s movements significantly. Investors will scrutinize ECB President Christine Lagarde’s commentary for insights into future monetary policy direction. Any indication of a dovish or hawkish pivot may either extend the euro’s recovery or reinforce bearish pressures.
Conclusion
EUR/GBP is undergoing a short-term recovery, with resistance at 0.82404 and 0.82436 in focus. However, a break below 0.82266 could reignite bearish momentum, resuming the broader downtrend.
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