The upward momentum of the EUR to GBP exchange rate which came after dovish comments by the BOE halted and last week was totally bearish for this forex pair. The surge stalled at the 200-day Simple Moving Average (SMA) marked in purple on the daily chart. This SMA had previously acted as a significant resistance level. As a result, the price reversed direction and started moving downward. The EUR/GBP pair experienced declines for four consecutive days, trading around the 0.8550s by the end of the week, and continued to fall further today when markets opened in the Tokyo session.

BOE Interest Rate Cut Pushed Back

The EUR-GBP rate soared higher in the third week of April, following comments from BOE members regarding impending rate cuts, sending the GBP down and this pair higher. However, the situation reversed and the Pound Sterling (GBP) is gaining momentum as market expectations suggest that the Bank of England (BoE) will probably hold off on reducing borrowing costs until later in Q2, instead of June.

Huw Pill, Chief Economist at the Bank of England, mentioned that rate cuts are not expected in the near term. Additionally, the recent increase in bond supply by the UK government has contributed to hawkish sentiments regarding the BoE’s monetary policy. Besides that, the Euro doesn’t have anything going for itself, as inflation keeps falling in the Eurozone and Germany.

EUR/GBP Chart Daily – Back in the Range

Since January EUR/GBP has been trading within a narrow range of one cent, fluctuating between 0.65 and 0.66. However, earlier this month, buyers entered the market and pushed the price above the 100-day Simple Moving Average (SMA), which had previously served as resistance and constrained upward movements, reaching 0.8650. Unfortunately, this breakout turned out to be a false signal, and the price retreated back down. Both of these movements were influenced by the rhetoric of the Bank of England (BOE).

German CPI Inflation Figures for April Released by Destatis

• April preliminary CPI YoY +2.2% vs +2.3% expected

• March CPI YoY was +2.2%

• April CPI MoM +0.5% vs +0.6% expected
• March CPI MoM +0.4%
• HICP March YoY +2.4% vs +2.3% expected
• Prior HICP YoY +2.3%
• HICP MoM +0.6% vs +0.6% expected
• Prior HICP MoM +0.6%

EUR/GBP Live Chart