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The EURGBP pair has started to look more technically interesting lately, and this could be because markets are starting to price in coming rate action from the European Central Bank.
ECB’s Kazimir said that a half-point September rate hike is “highly probable” earlier this week. This was then confirmed by ECB member Rehn who noted that it is “very likely that the September hike will be bigger than 25 basis points”.
The justification for the rate hike from ECB Rehn was simplified down to the fact that the Ukraine situation has created a low growth environment with high inflation, which requires action.
Many analysts expected the ECB to move higher month to month with 25 basis point increments but today there have been some comments that could mean larger hikes are coming.
Most traders would agree that the EURGBP pair is now showing signs of going much higher after moving above its 200-day moving average, and that the 50-day moving average has crossed the 200-day, creating a golden cross.
The ActivTrader platform shows that bearish sentiment is still at moderately high levels, with some 62 percent of traders still expecting more upside in the EURGBP pair.
This current high level of bearishness is however warning that the EURGBP pair might be getting ready to move even higher to the upside. A move above 0.8700 could be turbo charge the next upside move.
EURGBP Short-term Technical Analysis
The four-hour time frame shows that the EURGBP pair is technically bullish now over the short-term with the price trading well above its 200-period moving average and is consolidating above its 50-period moving average.
Lower time frame analysis currently shows the EURGBP pair is also trapped inside a triangle pattern. These patterns are typically considered to be neutral price patterns by traders.
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EURGBP Medium-term Technical Analysis
The daily time frame shows that the EURGBP pair is now above its 200-day MA and also above its 50-day moving average. In fact a golden cross is currently underway, where the 50-day MA is crossing the 200-day MA, this is very bullish.
Interestingly, the EURGBP pair is not yet overbought, therefore we could well see further upside towards the 0.8800 to 0.9000 area over time.
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