The euro consolidates above 0.8710 after rallying from the 0.8600 area. (Pivot Orderbook analysis)

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• The euro consolidates above 0.8710 after rallying from the 0.8600 area.
• The pound sells off after BoE’s dovish hike.
• EURGBP expected to move lower in the long-term – Danske Bank.

The pair currently trades last at 0.8721.

The previous day high was 0.8631 while the previous day low was 0.8585. The daily 38.2% Fib levels comes at 0.8613, expected to provide support. Similarly, the daily 61.8% fib level is at 0.8603, expected to provide support.

The euro is taking a breather right below 0.8740 following a nearly 1.3% rally against a vulnerable GBP on Thursday. The pair bounced up from session lows at 0.8600, to consolidate between 0.8710 and 0.8735 at the moment of writing.

The sterling has dropped across the board following the Bank of England’s dovish comments in the press conference that followed November’s monetary policy decision.

The Bank of England has hiked rates by 75 basis points, with two committee members voting for a softer hike. Beyond that, they signaled to a softer tightening pace over the next months, which has triggered a broad-based pound sell-off.

BoE President, Andrew Bailey has depicted a bleak economic outlook in the press release following the bank’s decision, warning that the country might have already entered a recession that could last two years and cause a 2.9% economic contraction.

FX analysts at Danske Bank see the pair picking up in the short term, to depreciating in the longer term: “We see a case for EURGBP to remain elevated in the near-term, but in the longer-term expect the cross to move lower as a global growth slowdown and the relative appeal of UK assets to investors are positive for GBP relative to EUR.

Technical Levels: Supports and Resistances

EURUSD currently trading at 0.8721 at the time of writing. Pair opened at 0.862 and is trading with a change of 1.17 % .

The pair remains strongly bullish on the daily timeframe. It trades above its 20 SMA @ 0.8696, 50 SMA 0.8702, 100 SMA @ 0.8596 and 200 SMA @ 0.8506.

The previous day high was 0.8631 while the previous day low was 0.8585. The daily 38.2% Fib levels comes at 0.8613, expected to provide support. Similarly, the daily 61.8% fib level is at 0.8603, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 0.8593, 0.8566, 0.8548
• Pivot resistance is noted at 0.8639, 0.8658, 0.8684

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