EUR/GBP rebounds from multi month low but awaits fresh impetus from BoE. FTSE futures point to a weaker open after a flat session on Wall Street and a weaker showing in Asia.

EUR/GBP ahead of Bank of England

EUR/GBP is on the rise for a second straight day ahead of the BoE monetary policy announcement and quarterly inflation report (FXE, fxb).

BoE are not expected to adjust policy, but traders will try to assess the likelihood of negative interest rates going forward. 

With a strong vaccine rollout and falling covid cases the central bank could sound cautiously optimistic regarding the outlook.

Eurozone retail sales expected Dec MoM+1.6% up from -6.1%

Read more about what to expect from the BoE rate announcement here.

EUR/GBP technical analysis

Extending a rebound from 0.88 EUR/GBP is trading around the intra-day high heading into the European open as it tests the descending trendline dating back to 26th January at 0.8830.

The neutral RSI suggests that investors are waiting for the BoE rate decision for fresh direction.

Should EUR/GBP managed to push above the trend line at 0.8830 the 50 sma at 0.8845 and the 100 sma at 0.8860 come into focus as areas of contention. A successful move beyond 0.8860 could negate the near term bear trend and could see the bulls target 0.89 round number ahead of the key 90.00.

Should the pair fail to break 0.8830 a move back towards the multi month low of 0.8795 could hold the bears from targeting 0.8740 a swing high in March ahead of 0.8700 round number.
 

FTSE struggles ahead of BoE negative rates revelation

FTSE futures point to a weaker open tracing Asia lower as the vaccine / stimulus rally pauses for breath and the reality of the current economic picture. 

BoE is set to reveal its stance on negative rates which could boost or drag on financials. 

Oil majors could get a boost from solid oil prices & earnings from RDSB in focus.

Also earnings from BT (BTGOF), Barratt Development (BTDPF), Unilever (UL).
 

FTSE technical analysis

The FTSE rebounded firmly from its monthly low of 6305 struck at the end of January. However, the recovery ran into resistance in the form of a descending trend line dating back to 21st January and has so far failed to breach this resistance here.

The RSI is neutral indicating that traders are awaiting fresh impetus from the BoE and from the scores of earnings.
Failure to break above the descending trendline at 6535 could see the FTSE retest 6485 yesterday’s low ahead of 6430. Beyond here there is little to catch the FTSE ahead of 6305.

Should the FTSE manage to break above 6535 horizontal resistance at 6575 could come into play, a break above which could see the bullish move gain momentum towards 6650.