EURGBP continues to trade lower as it bounced off the descending channel resistance on its 4-hour time frame. Price could keep dropping until the channel support around .8650, which might provide a countertrend opportunity.
Stochastic is already pulling up from the oversold region to indicate that buyers are regaining control of price action. However, the 100 SMA is still below the longer-term 200 SMA to confirm that the path of least resistance is to the downside.
The BOE was more hawkish in their recent policy statement, leading most market participants to price in another interest rate hike for later this year. For this particular decision, the UK central bank kept rates and asset purchases unchanged as expected.
In particular, the statement indicated that “The Committee judges that, were the economy to evolve broadly in line with the February Inflation Report projections, monetary policy would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast period than anticipated at the time of the November report in order to return inflation sustainably to the target.”
Euro zone data has been mixed, with Germany printing a couple of disappointing figures recently. Other top economies such as France and Italy are showing improvements.
French and Italian industrial production numbers are due today. As for the UK, manufacturing and industrial production data is due. The former could show a 0.3% uptick while the latter might see a 0.9% decline.