The euro cross extended higher again, the EURGBP set this decade’s all-time high, while EURAUD is the leader with 13% gains (Month basis) among euro crosses. Now, most notably, the EURGBP is finding resistance again at 0.9500 above here 0.9800 exists, it’s December 2008 high. Meanwhile, the euro underperforms against the safe havens CHF and JPY.

In last week’s special meeting, the MPC said the economic shock could be sharp and large. This suggests a temporary recession already exists. The pound has been under severe selling pressure against CHF, EUR, JPY, and USD.

Data review: In response to the covid-19 crisis, the BOE cut interest rate to 0.1% and increase its holding of UK government and corporate bonds.

In the special MPC meeting on March 19, the Bank of England slashes the interest rates to 0.1%. The MPC also confirmed that the economic shock led by Coid-19 could be sharp and large but should be temporary.

The MPC voted unanimously that the Bank of England should enlarge the TFSME scheme, financed by the issuance of central bank reserves.

Turning to data points, estimated annual growth in average weekly earnings for employees in Great Britain in the three months to January 2020 was 3.1% and the unemployment rate in the three months to January 2020 was estimated at 3.9%, largely unchanged compared with a year earlier and 0.2 percentage points higher than the previous quarter, according to ONS.

Data preview We will get UK PMIs and CPI, whereas the MPC meeting is the key driver.

We focus on BOE’s March Monetary policy meeting scheduled on 25th (Wed) with the minutes published on March 26. We expect the Bank of England will announce further stimulus to help to meet the needs of UK businesses and households in dealing with the associated economic disruption.

  • Moody’s Analytics reported, “We think the BoE will announce further stimulus next Thursday only if financial conditions worsen considerably, as it will want to keep any firepower it has left for wartime-like emergencies. With rates now already at the bank’s estimated effective lower bound, one option would be for it to further increase its asset purchases or broaden the pool of eligible assets. It could also further ease the provisions of its Term Funding Scheme with additional incentives to SMEs. A rate cut to zero can’t be ruled out either, but we think that this would be the bank’s less preferred option.”
  • ING said, “We aren’t expecting much news from the Bank of England meeting on Thursday, given that policymakers have already essentially gone all-in. However, we wouldn’t rule out further QE further down the line, although the timing is more uncertain.”


Prices have broken through the triple top at 0.9300 and spike through 0.940 its first resistance. Now the price falls into the range of 0.9500-0.8990 levels. The daily RSI lost the momentum, and the oscillator is remaining bearish.

So, the cross could now be facing stiff resistance at 0.9500; any pullback could find support at 0.9160 and 0.8990. On the flip side, a decisive breakout above 0.9500 could allow the cross to rally further towards 0.9800.


Morten Lund and Andreas Steno Larsen at Nordea said, “The BoE asset purchases are a game-changer for GBP rates while an increasing number of risks could take EUR/GBP to parity.”.

 It is important to always keep in mind the risks involved in trading with leveraged instruments.

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