EUR/GBP has been bullish during December and the first half of January, but has been making lower highs since then, as we approach the two meetings by the Bank of England (BOE) and the European Central Bank (ECB) which carry a high risk for this pair since both currencies are involved.

Although we have seen the price rising today after falling for three days in a row. The Euro is rebounding from weekly lows with EUR/USD bouncing from 1.0850s to above 1.09. while EUR/GBP bounced from around 0.8755 and peaked above the 0.8800 area, supported by higher Spanish inflation today ahead of monetary policy decisions on Thursday.

EUR/GBP H1 Chart – Sellers Have Returned Again

The 100 SMA rejecting EUR/GBP today

EUR/GBP jumped higher earlier today as Spanish consumer inflation CPI jumped to 5.8% from 5.7% previously, but the 100 SMA stopped the limb on the H1 chart. We decided to open a sell forex signal here, as the German GDP report showed a contraction in Q4, after the ECB raised interest rates several times since July.

Now the price has reversed back down and our signal is looking pretty good. The ECB and BOE meetings can send both currencies and this pair either way. So, we’re following the price action in EUR/GBP as it slips lower, heading toward the take profit target of our forex signal here.

Germany Q4 Preliminary GDP

• Q4 preliminary GDP QoQ -0.2% vs 0.0% expected
• Q3 GDP was +0.4%
• GDP (non-seasonally adjusted) YoY +0.5% vs +0.8% expected
• Prior GDP YoY was +1.2%
• GDP (working day adjusted) YoY +1.1% vs +1.3% expected
• Prior was +1.3%

Well, so much for the hope that the German economy would’ve been able to squeeze out a bit of growth at the end of last year. This may just be the preliminary reading but it goes to show that even with a less harsh winter, Europe’s biggest economy is facing up against daunting odds of beating a recession.

EUR/GBP Live Chart