The EUR/GBP pair quotations on the daily chart oscillate around the local resistance of 0.8580. The exchange rate has been recently falling dramatically and the appreciation of the pound was due to the reassuring political situation around the brexit. Now, however, the situation is changing as the market may start to price the possible effects of brexit on the economy. This seems to be slowing down, as evidenced by yesterday’s very poor reading of consumer inflation, for example.
This increases the pressure to lower interest rates, which is also increasingly often mentioned by BOE members at the end of January. The downward pressure can effectively weaken the currency. In turn, the economic data for the euro have recently been neutral and it is difficult to expect rapid action on the part of the ECB. Such a combination may therefore support the growth of this pair, and breaking the resistance will signal their continuation.
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