The rate of EUR to GBP continues to consolidate in a 1 cent range as BOE and ECB are keeping EUR/GBP bouncing between 0.65 and 0.66. Today’s Eurozone CPI inflation report for March offered some volatility but couldn’t break the range of this pair, so the consolidation will likely continue.

EUR/GBP Chart Daily – The 100 SMA has Turned Into Resistance Now

EUR/GBP continues to bounce in the trading range that this currency pair has been stuck in during the last three months. The 50-day simple moving average (yellow) was acting as resistance before. However, we saw a break after a bullish move following lower UK wages and jobs figures which weakened the British pound (GBP) and consequently strengthened the euro (EUR), leading to upward pressure on the EUR/GBP pair. But the climb stopped right at the 100 SMA (green) and returned back down.

ECB and BOE Signalling Interest Rate Cuts

Recent statements from central bank officials, including Bank of England (BoE) Governor Andrew Bailey and European Central Bank (ECB) Governing Council member Yannis Stournaras, had a notable impact on the EUR/GBP currency pair, sending it higher to the 100 SMA but then reversing back down.

Governor Bailey’s remarks indicating that market expectations for three quarter-point rate cuts in 2024 are justified, given the absence of strong persistent inflationary pressures, have fueled predictions of a rate cut by the BoE in June. This sentiment exerted downward pressure on the Pound Sterling (GBP) and contributed to the EUR/GBP pair surpassing the 50-day simple moving average (SMA) in March as it moved higher.

However, this week’s developments, particularly ECB Governing Council member Stournaras’s mention of the prospect of four interest rate decreases in 2024, totaling a 100 basis point reduction by year-end, have added to the negative pressure on the EUR/GBP cross. This speculation regarding potential ECB rate cuts may have shifted market sentiment away from the euro (EUR) and towards the GBP, leading to a reversal in the recent gains of the EUR/GBP pair. As a result, EUR/GBP is trading at the middle of the range near the 0.8550 level, showing that the consolidation period continues.

EUR/GBP Live Chart