Technical Analysis Reveals Buy Signal for EUR to GBP Amid Surprising Market Response
22 June 2023
The EURGBP currency pair is currently providing intriguing signals, somewhat at odds with the recent economic events in the UK. Today, the Bank of England delivered a hawkish surprise by raising interest rates by 50 basis points, double the expected increase of 25 points. This pushed the rate to 5%. Typically, such a move would bolster the currency's value; however, the pound's reaction has been volatile and it has not shown considerable strength so far.
In terms of technical analysis for EURGBP, we have witnessed a false breakout below the 0.857 support level, denoted in yellow on the chart. Since then, the currency pair has regained ground and moved back above this level. Further reinforcing the positive outlook, it has broken above the mid-term downtrend line, marked in pink, thus generating a buy signal.
As for future price targets, I'm eyeing the 0.873 level, highlighted in green on the chart, or potentially even reaching up to the long-term downtrend line, marked in red. Keep in mind, though, this is a longer-term target and may not be reached in the immediate future.