- EUR/GBP is trading 0.44% lower as the pound outperforms.
- There could be some trouble at 0.9060 as it is an important zone.
EUR/GBP daily chart
EUR/GBP has moved lower after the Bank of England’s Cheif economist poured cold water on the idea of negative interest rates in the UK for now. He went on to say it could take months to look at the cost-benefit analysis. This means there could be some movement to later in the curve in the rates markets, which would take some pressure off the short term in GBP.
The chart shows the extent of the sell-off. The price is now moving lower towards the bottom of the flag type pattern. Before that, the red support zone at 0.9060 would need to be broken to the downside. This level has been used many times as both support and resistance but in the middle of august, it was a very firm resistance.
The indicators are looking pretty bearish at the moment. The MACD histogram is breaking to the downside and the signal lines are already depressed. The Relative Strength Index is under 50 and there is still room for the indicator to move lower.
Overall, this could be the trend change the market has been looking for. The news out of the latest round of Brexit negotiations has been more positive too and this could be another catalyst for a move lower.