EUR/GBP: failures at 0.8910 opens risk to downside ahead of BoE

• EUR/GBP failures making a case for the downside?
• EUR/GBP needs to get above 0.8936.

After a number of bullish sessions since the start of February and rising to threaten 0.8900 during the European morning again, the cross is running out of steam today, failing at 0.8910 yesterday and offered below the 21-hr SMA while testing the 100-D SMA. Currently, EUR/GBP is trading at 0.8853, down -0.17% on the day, having posted a daily high at 0.8901 and low at 0.8845. 

Both the pound and the euro are fragile in NY after and continue to slide. The euro has dropped vs the dollar despite apparent good political news with Merkel's conservatives making big concessions to the SPD in a coalition deal, (peripheral bond yields dropped with the SPD touted for German finance ministry). 

In respect to the pound, after a quiet overnight range between 1.3948-68, the sterling is weak on the basis of Brexit concerns, discounted probability of BoE hikes and a firm dollar once again onto the 90 handle in the DXY, (DXY +0.62%).

BoE next key event risk

Analysts at Scotiabank explained, " BoE risk is elevated heading into Thursday’s policy decision (expected hold) and Quarterly Inflation Report, with a focus on Gov. Carney’s press conference tone as well as the MPC votes. Rate expectations have softened recently and OIS are currently pricing a 50% chance of a hike for May."

EUR/GBP levels

Should the bulls find traction and momentum build, a break of 0.8910 would open up a recovery to 0.8936 as the January high ahead of the 0.9034 October 2017 high. A break of the 21-D SMA at 0.8817 opens 14th Dec double bottom support at 0.8762 ahead of 0.8689.