During yesterday’s trading session EUR/GBP traded within the range of 0.7916-0.7946 and closed at 0.7939, adding 0.2% on a daily basis.
At 7:07 GMT today EUR/GBP was up 0.04% for the day to trade at 0.7944. The pair touched a daily high at 0.7948 at 5:50 GMT.
At 11:45 GMT the European Central Bank (ECB) is to announce its decision in regard to borrowing costs. The median estimate by experts suggests that the central bank will probably maintain its benchmark interest rate at the record low level of 0.15% at the policy meeting today. The ECB cut borrowing costs by 0.10% at its meeting on June 5th. Short-term interest rates are of utmost importance for the valuation of national currencies. In case the central bank is dovish about inflationary pressure in Euro zone’s economy and thus, either puts interest rates on hold, or reduces them, this will usually have a bearish effect on the common currency.
The interest rate decision will be followed by a press conference of the ECB President Mario Draghi, at which he will take a statement on monetary policy. During this event volatility of euro crosses is usually high. In case Draghi offers a more hawkish tone, the euro will usually receive support, while a more dovish tone will have a bearish effect on the currency. The press conference is scheduled at 12:30 GMT.
At 11:00 GMT Bank of England is to announce its decision on monetary policy. The benchmark interest rate will probably be left unchanged at 0.50%, where it has been set at the meeting on policy on February 5th 2009. Short-term interest rates are of utmost importance for the valuation of national currencies. In case the central bank left intact or raised borrowing costs, this would have a bullish effect on the sterling.
At the same time, the monthly pace of bank’s monetary stimulus will probably be left intact as well, at 375 billion GBP. The central bank issues new money in order to purchase gilts from private investors such as pension funds and insurance companies. In case monetary stimulus is increased (in order to further spur economic growth), this will usually devalue nation’s currency.
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 0.7934. In case EUR/GBP manages to breach the first resistance level at 0.7951, it will probably continue up to test 0.7964. In case the second key resistance is broken, the pair will probably attempt to advance to 0.7981.
If EUR/GBP manages to breach the first key support at 0.7921, it will probably continue to slide and test 0.7904. With this second key support broken, the movement to the downside will probably continue to 0.7891.
In weekly terms, the central pivot point is at 0.7958. The three key resistance levels are as follows: R1 – 0.8011, R2 – 0.8039, R3 – 0.8092. The three key support levels are: S1 – 0.7930, S2 – 0.7877, S3 – 0.7849.