EUR/GBP Chart and Analysis
- Multi-week trend remains in place.
- Central Bank speak on tap.
The combination of a weak British Pound and a firming Euro has seen EUR/GBP rally over four big figures from its mid-April low. The pair have respected a multi-week upward trend, especially the supportive trend line, and the move may have further to go as the ECB prepares to hike rates and enact quantitative tightening. While the central bank will likely hike rates by 25 basis points at its next meeting in July, various ECB members of late have been mooting a possible 50bp hike if inflation data continues to worsen. Financial markets are currently pricing in around 160 basis points of ECB rate hikes this year. There are only four ECB policy meetings left this year, and financial markets are suggesting that there will be at least two meetings where 50bp rate hikes are announced.
Looking ahead today, the main event for the Euro will be the release of the preliminary German inflation data for June at 13:00 UK. One hour later an important panel discussion at the ECB Forum including ECB President Christine Lagarde, the Fed’s Jerome Powell, and BoE governor Andrew Bailey will need to be followed closely.
For all market-moving events and data releases, see the DailyFX Calendar.
The daily EUR/GBP continues to suggest that the pair will move higher in the coming days and weeks. The multi-week bullish channel continues to be in charge of direction, while the pair are now trading above all three simple moving averages, a bullish set-up. The pair are less than one big figure away from the multi-month high at 0.8721, and a break above here will see EUR/GBP back at levels last seen in February 2021.
EUR/GBP Daily Price Chart June 29, 2022
Retail trade data show 55.93% of traders are net-long with the ratio of traders long to short at 1.27 to 1. The number of traders net-long is 13.13% lower than yesterday and 4.31% lower from last week, while the number of traders net-short is 7.48% lower than yesterday and 13.79% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/GBP prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/GBP price trend may soon reverse higher despite the fact traders remain net-long.
What is your view on EUR/GBP – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.