EUR/GBP is displaying the signs of a major reversal

UK Union Jack Flag alongside some European Union flags
Matt Simpson financial analyst
By :  ,  Market Analyst

In today’s video we look at EUR/GBP across the monthly, weekly and daily timeframe. Momentum is clearly pointing higher, although it is debatable was to whether the reward to risk ratio is adequate on the daily timeframe, given market has shown little in the way of a pullback this past week. But the price action on higher timeframes suggests this could be the early stages of a much larger move.

20220331yielddifferentialsFX

The BOE have disappointed bulls by stepping off of their hawkish accelerator, whilst data from Europe continues to place pressure on the ECB to tighten sooner than later. In fact, the German 2-year yield is now positive for the first time since 2014, which is narrowing the gap between German and UK 2-year yields and supporting the higher EUR/GBP.

 

 

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