Despite the Bank of England’s hawkish policy, the EURGBP currency pair is expected to experience further increases at a rate of 0.86487.

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• EUR/GBP gauges more gains despite hawkish BoE policy.

The pair currently trades last at 0.86487.

The previous day high was 0.8629 while the previous day low was 0.8584. The daily 38.2% Fib levels comes at 0.8612, expected to provide support. Similarly, the daily 61.8% fib level is at 0.8601, expected to provide support.

The EUR/GBP pair tests the resistance of 0.8650 as the Bank of England (BoE) maintains a hawkish stance in its August monetary policy. BoE policymakers elevate interest rates by 25 basis points (bps) to 5.25%. Nine-member-led-BoE Monetary Policy Committee (MPC) shows a majority towards an interest rate hike while policymaker Swati Dhingra supports an unchanged interest rate decision.

Inflationary pressures in the United Kingdom economy are highest in comparison with other G7 economies due to labor shortages, high food inflation, and resilience in consumer spending. And, a continuation of the policy-tightening spell was highly expected by the market participants.

One league of investors was expecting that the BoE will raise interest rates consecutively by 50 bps as inflation is almost four times the desired rate of 2%. UK PM Rishi Sunak promised a decline in inflation to at least 5% by year-end and for that fat rate hikes are warranted.

In a monetary policy statement, BoE Governor Andrew Bailey conveyed BoE reiterated that it will ensure that the bank rate will stay “sufficiently restrictive for sufficiently long” to return to the inflation target.

Meanwhile, the Euro remains solid as inflationary pressures in Eurozone are softening. Headline and core inflation in July deflated by 0.1% on a monthly and prices of products at factory gates are declining as firms are passing the benefit of lower input prices to end consumers.

In spite of easing price pressures fears of more interest rate hikes from the European Central Bank (ECB) are still elevated as a victory against inflation is not announced yet.

Technical Levels: Supports and Resistances

EURGBP currently trading at 0.8638 at the time of writing. Pair opened at 0.8605 and is trading with a change of 0.38 % .

The pair is trading above its 20 Daily moving average @ 0.8585, above its 50 Daily moving average @ 0.859 , below its 100 Daily moving average @ 0.8681 and below its 200 Daily moving average @ 0.8725

The previous day high was 0.8629 while the previous day low was 0.8584. The daily 38.2% Fib levels comes at 0.8612, expected to provide support. Similarly, the daily 61.8% fib level is at 0.8601, expected to provide support.

Note the levels of interest below:

• Pivot support is noted at 0.8583, 0.8562, 0.8539
• Pivot resistance is noted at 0.8628, 0.8651, 0.8672

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