The Euro to Pound exchange rate continues to move sideways ahead of monetary policy decisions by the Bank of England (BoE) and the European Central Bank (ECB) on Thursday. The central banks are expected to hike rates by 50 bps this week. However, the recent Eurozone and UK Inflation numbers have certainly been encouraging. The currency pair's future direction depends upon the central bank’s view on the future path of interest rate changes.

EURGBP traded higher and held gains on Tuesday morning even as data from the German retail sales and GDP fell short of forecasts. Meanwhile, the Euro and GBP were lower in late afternoon trading Tuesday against a resurgent U.S. dollar after tumbling in the previous session, which benefited from safe-haven demand on renewed worries about higher rates and a recession in Europe. US Federal Reserve policymakers will meet to make their decisions on interest rates and monetary policy on Wednesday before the BOE and ECB decision.

EURGBP weekly technical outlook

EURGBP has been in a tight range in the past few days. As of this writing, the currency pair recovered back to above 0.8800. On the upper side, the key resistance is located for the pair around 0.8850, a break above this level will confirm a possible move to 0.8890 and 0.8920. On the downside, the decline is more extensive, and it will be hard to rule out a run towards 0.8760, below which the slide could further get extended towards the 0.8730/20 regions.

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