Current trend

The EUR/GBP pair is trading within the long-term downtrend, as the European currency is under pressure amid a new easing of monetary policy by the European Central Bank (ECB).

Yesterday, the European regulator reduced the cost of borrowing for the third time in a row: the key rate was reduced from 3.65% to 3.40%, the margin rate from 3.90% to 3.65%, and the deposit rate from 3.50% to 3.25%. In comments on their decision, officials noted that the downtrend in inflation continues, and the indicator will be fixed at the target level of 2.0% next year. At the same time, according to the members of the regulator's board, the European economy will be able to avoid recession by growing by 0.8% in 2024 and by 1.3% in 2025. Nevertheless, most experts fear that the Eurozone is facing a recession, to combat which the ECB will have to continue reducing the cost of borrowing, and at a more serious pace – not by 25 basis points, but by 50 basis points.

The Bank of England is also expected to continue lowering interest rates in the near future, as the consumer price index (CPI) stood at 1.7% in September. However, since unemployment fell to 4.0% in August and employment increased by 373.0 thousand, this gives the expert reason to believe that British monetary policy will soften more slowly than in the Eurozone.

Thus, a further decline in the EUR/GBP pair in the medium term is the most likely scenario.

Support and resistance

The asset is currently testing the 0.8300 mark (Murrey level [8/8]), consolidating below which will allow quotes to continue to decline towards the targets of 0.8239 (Murrey level [1/8]) and 0.8178 (Murrey level [2/8]). The key for the "bulls" is the level of 0.8422 (Murrey level [2/8]), supported by the upper line of Bollinger Bands, the breakout of which will ensure the resumption of upward dynamics to the levels of 0.8544 (Murrey level [4/8]), 0.8606 (Murrey level [5/8]), but so far this scenario seems less likely.

Technical indicators confirm the continuation of the downtrend: Bollinger Bands are pointing downwards, MACD is growing in the negative zone, and Stochastic is horizontal near the oversold zone.

Resistance levels: 0.8422, 0.8544, 0.8606.

Support levels: 0.8300, 0.8239, 0.8178.

Trading tips

Short positions should be opened below 0.8300 with targets of 0.8239, 0.8178 and a stop-loss around 0.8345. Implementation period: 5–7 days.

Long positions can be opened above the 0.8422 level with targets of 0.8544, 0.8606 and a stop-loss around 0.8315.