- The EUR/GBP mildly gained to settle at 0.8535, marking a slight retreat for bears after January’s significant push.
- The cross will tally its sixth consecutive losing week.
- Markets perceived a dovish tone in the BoE’s decision on Thursday which led to a GBP weakening.
On Friday’s session, the EUR/GBP was spotted trading mildly higher at 0.8535, marking scant gains. Although the daily chart displays a neutral to bearish sentiment, sellers appear to be taking a pause, following their push of the pair by over 1.60% in January. Meanwhile, on the weekly chart, indicators linger deep in negative territory, suggesting sellers remain dominant.
On the fundamental side, the Sterling closed the week weaker due to the Bank of England delivering a dovish hold on Thursday. The Bank changed its language and left behind the ‘further tightening’ stance while surprisingly, Swati Dhingra voted for a rate cut. Market forecasts 100-125 basis points worth of rate cuts this year, likely starting in Q2 and as for now, is less easing priced in than the European Central Bank’s (ECB) which may likely limit the upside for the cross.
The indicators on the daily chart testify to a negative outlook for the cross as the bears mark the terrain. The Relative Strength Index (RSI) attempts to counteract the bearish atmosphere, displaying a positive slope, but is still languishing in a negative territory. Simultaneously, the Moving Average Convergence Divergence (MACD) continues to exhibit its bearishness with diminishing red histogram bars. Furthermore, the currency pair’s performance below the 20-day, 100-day, and 200-day Simple Moving Averages (SMAs) evidences the overarching dominance of bearish sentiments. However, following the pair’s downtrend being pushed by more than 1.60% over the course of January,the bears taking a breather which may give room for some upside in the short term.
Moving on to the larger time frame, the weekly chart also calibrates a similar pattern, further solidifying the bearish atmosphere. The Relative Strength Index (RSI) on this chart too, is on a negative trajectory while the Moving Average Convergence Divergence (MACD) mimics its daily brother, again with decreasing red bars. That being said, after tallying its sixth straight weekly loss, the pair may consolidate next week, favoring the case of further upward movements.