There are both potential long and short opportunities in EUR/GBP just ahead, all depending on what we may get from the Bank of England’s upcoming monetary policy statement.
Before moving on, ICYMI, today’s Daily U.S. Session Watchlist looked at a setup on EUR/NZD as it retests channel support, so be sure to check that out to see if there is still a potential play!
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
Japan Services PPI at 11:50 pm GMT
France Business Confidence at 6:45 am GMT (June 24)
Spain GDP at 7:00 am GMT (June 24)
Germany Ifo Business Climate at 8:00 am GMT (June 24)
Bank of England Monetary Policy Statement at 11:00 am GMT (June 24)
What to Watch: EUR/GBP
The latest monetary policy statement from the Bank of England is just ahead in the upcoming London trading session, which means volatility may pick up quickly for the British pound. With that expectation, the consolidation pattern on EUR/GBP is one to watch for a potential “trading the news” setup.
Expectations for the event are that the Monetary Policy Committee will not make any moves to their current policy, nor will they change their economic forecasts. So, there is a chance this event could be a dud for those looking for volatility, but in the off-chance that they do surprise the markets, odds are pretty good we could see a break in the consolidation / descending triangle pattern forming on the hourly chart above.
Given that the price action is showing a bearish lean, any bullish type scenarios for Sterling (i.e., an increase in members looking to reduce the asset purchasing program, a surprise upgrade to their growth/inflation outlook) would likely spark a rally in GBP. And if EUR/GBP were to break the support area around 0.8550, then a move to 0.8500 with the session is not unreasonable given the daily ATR of around 43 pips.
But if we see dovish sentiment from the Bank of England tomorrow, then an upside break of the falling ‘high’s pattern on EUR/GBP is the price action move to watch out for for a potential long position. This scenario could quickly draw in the bulls, especially after better-than-expected business sentiment numbers from the Eurozone today.