EUR/GBP is currently trading lower after a pullback towards 0.8800 area recently. The slowdown of the eurozone's growth is expected to impact further EUR gains versus GBP that might lead to certain bearish pressure in the pair.
Citing ECB board member Benoit Coeure, the eurozone's economic slowdown may be longer and deeper than expected but it is not clear yet that the currency bloc has entered a lasting downturn. Obviously, the slowdown is going to disrupt EUR gains in the medium term. Yesterday the European Commission cut the economic forecast of 2019 to 1.3% from 1.9% in the previous forecast which derived the market sentiment away from EUR, leading to stronger GBP gains.
On the other hand, Bank of England Governor Mark Carney warned about certain tensions emerging in the UK economy which is called as "Fog of BREXIT". This condition is expected to cause short-term volatility in UK economic data and may also affect businesses and consumer spending. This week the Bank of England decided to maintain the key policy rate unchanged at 0.75%, which helped the currency to gain certain momentum.
Meanwhile, EUR has been hurt by fresh evidence of an economic slowdown, whereas GBP is also trading under pressure from the BREXIT uncertainty which indicates certain indecision and correction in the coming days. To sum up, GBP is expected to gain certain momentum over EUR.
Now let us look at the technical view. The price is currently trading lower under certain impulsive bearish pressure which is expected to lead the price towards 0.8600 area in the coming days. The price is also being held by the dynamic level of 20 EMA as resistance which is expected to lead to further bearish momentum. As the price remains below 0.8850 area, the bearish bias is expected to continue.
SUPPORT: 0.8600, 0.8700-25
RESISTANCE: 0.8800-50, 0.90
The material has been provided by InstaForex Company - www.instaforex.com