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Bullish Break Soon for EUR/GBP If BOE Gives Dovish Signals

Since the start of 2024, the EUR to GBP rate has been trading within a narrow range of one cent, fluctuating between 0.65 and 0.66, but we might see a bullish breakout soon. However, in April, buyers entered the market, pushing the price above the 100-day Simple Moving Average (SMA), previously a resistance level that constrained upward movements, reaching 0.8650. This breakout initially suggested a positive trend reversal.

EUR/GBP Chart Daily – Back in the Range

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However, it turned out to be a false signal, and the price retreated. falling back within the range. The Bank of England’s (BOE) communication played a role in both of these developments as they softened their tones earlier in April, but they continue to keep the hawkish stance nonetheless. The move has now exceeded the converging 100-day Simple Moving Average (green) on the daily chart for EUR/GBP and is encountering resistance from the 200-bar SMA (purple) at 0.86.

The price hesitated yesterday near these technical levels, as risks can be identified and limited against these dual levels. A break above this level, along with the higher 100-day SMA at 0.8571, would increase the pair’s bullish bias. However, if the price remains below these levels, another decline towards the lower end of the range could occur. This current level serves as a significant indicator for both buyers and sellers. A move above the 0.86 moving average would target April’s high, while a failure to break above could result in a reversal by sellers, pushing the price towards the bottom of the range.

UK Retail Sales Fall in APril, EU Sales Increase

In April, the British Retail Consortium (BRC) reported a significant decline of 4.4% year-on-year in like-for-like retail sales, contrasting with expectations of a 1.6% increase. This sharp downturn marks a stark reversal from the 3.2% growth observed in March and represents the lowest reading since November 2019.

In the Eurozone, retail sales (year-on-year), as reported by Eurostat, expanded by 0.7% in March, reversing a previous decline of 0.5%. Additionally, month-over-month growth stood at 0.8%, surpassing the anticipated increase of 0.6% and reversing the prior decrease of 0.3%.

Bank of England to Keep Interest Rates on Hold

The Bank of England (BoE) is anticipated to maintain its interest rates unchanged at 5.25% during its meeting on Thursday. Investor sentiment regarding a potential rate cut by the BoE has been postponed to September due to robust wage growth in the United Kingdom (UK), which is propelling core inflation, the preferred inflation metric of the central bank.

 EUR/GBP Live Chart

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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