- EUR/GBP up by 0.41 percent to around 0.8740.
- BOE estimates 14% economic contraction.
- More economic stimulus might be on the way.
The EUR/GBP exchange appears to have gained zero influence from the Bank Of England’s latest economic forecast in which it predicted that the UK’s economy would contract by 14% this year. Contrary to expectations, the Pound Sterling still managed to win some positive sentiments, which allowed it to hold off pressure from the Euro. The BOE’s announcement and its lack of an impact on the GBP allowed the EUR/GBP price to ward off bearish attempts, and it traded at 0.8740.
Time : 08/05/2020
Pivot : 0.8749
Technical view : Short below 0.8729
Target : 0.8709, 0.8695, 0.8664 and 0.8625.
Comments : Weak bearish
Last Price : 0.8740
The price is currently weak bearish, but if the bearish trend continues, then it is expected to gain support at around the 0.8709, 0.8695, 0.8664, and 0.8625 levels. If the price turns bullish, then it will have to contend with resistance at around the 0.8769, 0.8789, 0.8803 and 0.8833 levels.
Although there is the expectation that the UK economy will contract in 2020, analysts and traders remain optimistic about potential gains over the next few weeks. This is due to the expectations that the UK government will ease restrictions that had been put in place to prevent the spread of COVID-19. So far, the Pound has taken a massive hit due to the coronavirus, which has resulted in millions of job losses and the shutdown of business and production activities.
Recent reports revealed that the British Prime Minister Boris Johnson will announce some changes this coming weekend, and they will likely be eased social restrictions. Meanwhile, the BOE’s recent speculation might pave the way for more economic stimulus measures. The central bank might buy more bonds in June.
There are also concerns that the Euro might fail to rally to its full potential even after the coronavirus is no longer a concern. This is because Britain is expected to resume its Brexit deliberations, and this could cut short the Euro’s gains.