Although euro-dollar made some gains last week, the common currency remains close to 2023’s lows against the
. One of the main reasons for that is the Bank of England’s determination to tackle inflation, which at 10.1% remains much higher than any other major economy. Although it seems likely that the European Central Bank will need to tighten further this summer, the Bank of England will still probably go higher. The Bank of England’s expectations for inflation have hardened in recent months, with a return to the target range not predicted until the first half of next year.
On the chart, £0.86 seems to be a very strong area which might drive another bounce if tested this week, barring any major surprise from the data. If British inflation declines by 2%, as currently expected, the euro could have room to rise to the weekly Fibonacci fan’s 50% above £0.87, or possibly higher in the short term.
However, in the event of a higher British inflation release compared to the consensus, there might be a retest lower, and maybe even a short-term breakout from there. Traditionally, it would make sense for traders to avoid large positions until a major release like Wednesday’s shows a clear result.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.