EUR/GBP remains on the defensive below mid-0.9000s post-ECB/Lagarde
- The post-ECB selling around the euro assisted EUR/GBP to bounce off the 0.9000 mark.
- The attempted intraday recovery move faltered near a descending trend-line resistance.
The EUR/GBP cross rallied over 50 pips from two-week lows and refreshed daily tops, around the 0.9060 region in the last hour, albeit quickly retreated few pips thereafter.
The cross once again managed to find decent support near the 0.9000 psychological mark and gained some intraday traction after the ECB decision on Thursday. As was anticipated, the European Central Bank left intact its main refinancing operations, marginal lending facility and deposit facility at 0%, 0.25% and -0.5%, respectively.
In addition, the central bank left its Pandemic Emergency Purchase Program (PEPP) unchanged at €1.35 trillion ($1.6 trillion) and reiterated that it will run until at least June 2021. In the accompanying statement, the ECB gave a strong indication that it will likely boost its emergency bond-buying program to stabilize the euro-area economy.
In the post-meeting press conference, the ECB President, Christine Lagarde said that the Governing Council has agreed to take action and recalibrate its policy at the next policy meeting in December. Lagarde further added that inflation is expected to remain negative until early next year and that the near-term outlook has deteriorated.
The ECB's dovish outlook and commitment to take action in December took its toll on the shared currency and assisted the EUR/GBP cross to bounce off lows. However, the offered tone surrounding the British pound, amid persistent Brexit uncertainties and a broad-based USD strength, capped the upside, rather prompted some selling at higher levels.
From a technical perspective, the intraday recovery move stalled near a resistance marked by a one-week-old descending trend-line. This, along with strong horizontal support near the 0.9000 mark constitutes the formation of a descending triangle, warranting some caution for bullish traders and positioning for any meaningful positive move.
Technical levels to watch