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EUR/GBP tumbles towards 0.8700 as banking turmoil weighs on the Euro.
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Pound gains on Euro as market brace for UK CPI data and BoE policy decision.
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GBP buoyed by increasing odds of a pause in the BoE rate decision.
EUR/GBP faces significant pressure as markets await UK Consumer Price Index (CPI) and Bank of England (BoE) policy decisions. The euro began to fall amid ongoing banking problems, as reports showed that two more commercial banks are under investigation for possible contamination.
The pound sterling is getting a boost as currency markets value a 50% chance of no interest rate hike by the BoE on Thursday and the same chance of a 25 basis-point hike. With the odds of a break increasing, it is considered a positive in banking turmoil.
EUR/GBP is currently at multi-month lows at the 0.8725 level, which is the surface of an ascending trendline that started at the 0.8342 mark on the daily timeframe. A credible break below will likely send the pair into unfamiliar territory until the support zone at the 0.8600 level is reached.
The 21-daily moving average (DMA) and 50-DMA crossover are contributing to the bearish bias for EUR/GBP. Any upside gains are likely to be limited around the 0.8800 mark, following both moving averages. Although the Relative Strength Index (RSI) is indicating oversold conditions for the pair, the price is likely due for a pullback.
All eyes will be on the UK’s CPI data before heading into the BoE rate decision later this week.
EUR/GBP: Daily chart
