Current trend

The euro is trading at low levels relative to its major peers, excluding the American dollar, and the EUR/GBP pair is moving in a corrective trend at 0.8541.

Yesterday, at the meeting of the European Central Bank (ECB), the officials, as expected, kept the monetary policy parameters (key rate 4.50%, margin rate 4.75%, and deposit rate 4.00%) and allowed for the possibility of their reduction if inflationary pressure weakens. Representatives of the regulator said that the dynamics of decline in consumer prices generally confirm medium-term forecasts and are ensured by a decrease in the cost of food and goods but did not provide specific dates for the start of adjustments to the cost of borrowing. In addition, economists confirmed their intention to cease reinvestment of funds under the Pandemic Emergency Purchase Program (РЕРР) by the end of the year in connection with the COVID–19 and to reduce the Asset Purchase Program (APP) significantly. The current rate of reduction in РЕРР is 7.5B euros per month, which will be enough to close the program in November-December.

The UK’s economic growth remains very poor, with gross domestic product (GDP) rising as expected by 0.1% MoM in February, down from 0.3% previously, slowing the rate to –0.2% YoY. The main reasons for the negative dynamics remain the industrial and the real estate sector. Industrial production increased by 1.1% MoM and 1.4% YoY, and construction adjusted by –1.9% MoM and –2.0% YoY.

Data suggests that the EUR/GBP pair may trade within a wide sideways range with some decline.

Support and resistance

The trading instrument moves within an ascending corridor with dynamic boundaries of 0.8600–0.8500, forming a reversal after reaching the resistance line.

Technical indicators have issued a sell signal: fast EMAs on the Alligator indicator move away from the signal line, and the AO histogram forms downward bars, approaching the transition level.

Resistance levels: 0.8560, 0.8600.

Support levels: 0.8530, 0.8480.

Trading tips

Short positions may be opened after the price declines and consolidates below 0.8530, with the target at 0.8480. Stop loss – 0.8560. Implementation period: 7 days or more.

Long positions may be opened after the price rises and consolidates above 0.8560, with the target at 0.8600. Stop loss is around 0.8540.