EUR/GBP Prediction Ahead of BOE’s Massive Rate Hike
- EUR/GBP has lost 4% from June’s highest mark.
- Focus remains on the upcoming rate decision by the Bank of England.
- The central bank will introduce a 0.50% interest rate increase to curb inflation.
EUR/GBO maintained sideways moves early on Thursday as market players concentrated on the upcoming rate decision by BOE (Bank of England) and Germany factory orders.
While writing these lines, the pair traded at 0.8365, the level it has traversed over the past few days. This value is nearly 4% beneath June 2022 highest mark.
BOE Rate Decision
The EUR-GBP exchange rate remained in a somewhat narrow range within the last few days, with focusing shifting to BOE’s interest rate move. Also, the pair struggled as market players digested the current natural gas disaster in the EU.
The Bank of England will end its 2-day conference on Thursday. Considering previous statements by the bank’s head, Andrew Bailey, analysts trust BOE will execute its highest rate increase in more than 27 years. Economists see the central bank surging rates by 50 basis points and ensuring a 1.75% headline rate.
The upcoming rate decision is at a challenging time for the United Kingdom economy. First and foremost, the International Monetary Fund has emphasized that the nation will experience the slowest resurges among the G7s.
The latest data confirmed this weakening. For instance, consumer confidence and retail sales have declined drastically within the last few months. That’s crucial as consumer spending remains a lucrative sector of the UK’s economy.
Secondly, similar to other nations, the United Kingdom has seen a sharp rise in inflation. The latest numbers indicated that the nation’s inflation increased to 9.4%, the highest mark in over three decades. Moreover, the crucial housing markets show stabilizing signals, whereas Brexit slowed international trade.
On a positive note, the Bank of England meets when the labor sector remains strong. The latest data indicated the unemployment rate stayed at 3.7%, meaning the UK doesn’t have unemployment issues. Thus, the central bank might execute a dovish hike.
The 4hr chart shows the EUR-GBP rate maintained massive downsides within the last few days. The pair stayed beneath 0.8392 and 0.8400 crucial support floors, which were May and June’s lowest zones. Meanwhile, EUR/GBO has plunged beneath 25- and 50-day Moving Averages.
The Moving Average Convergence Divergence has printed a bullish divergence setup. Thus, the pair might maintain downtrends after the Bank of England’s decision. Such a move would open doors to support at 0.8300.