EUR/GBP analysis on November 18, 2022
EUR/GBP demonstrates the worst dynamics on Friday, trading close to the key level of 0.8700. Yesterday the pair updated the lows of November 8 amid FOMC officials' statements on the need for further rate hikes.
The head of the St. Louis Fed said it was important to continue monetary easing until inflation falls to the 2.0% target. According to James Bullard, the range of maximum rates could be 5.5%-7.0%.
Yesterday the U.K. government released a medium-term budget plan whose main goal is to stabilize the British economy. According to the strategy, tax increases and spending cuts are expected. In addition, the Cabinet Office predicts the beginning of recession in the fourth quarter of this year.
Despite the negative news, sterling strengthened on Thursday, which led EUR/GBP to go down to the local lows.
EUR/GBP technical analysis
Major forex indicators reflect the mixed nature of trading and do not give unambiguous signals. Bollinger bands are stretched horizontally. MACD indicator retains a weak sell signal, but remains in a positive range. The stochastic oscillator is testing for a breakdown of the 20% oversold area boundary.
If the pair fixes below 0.8692, we open the sale with the target indicator 0.8645. Stop-loss is set at 0.8720.
It is advisable to buy after a breakthrough of the quotation above 0.8740. The target is 0.8800. Stop-loss is put at 0.8710.
Read more: Technical analysis on the forex market