Euro Cross Pick 09.05.2012

DailyFX

As the Bank of England and the European Central Bank interest rate decisions come into focus, we may see the EURGBP threaten the range-bound price action carried over from the previous month as market participants weigh the prospects for future policy. The BoE may turn out to be a non-event as the central bank maintains a wait-and-see approach, but the ECB may trigger a sharp selloff in the exchange rate should the policy meeting disappoint. Indeed, there’s high expectation of seeing a major development amid talks that the Governing Council will introduce a sterilized, unlimited bond purchasing program to tackle the debt crisis, but it seems as though the central bank will stay away from capping yields as they look to target short-term maturities. However, if we don’t see any additional details on the non-standard measure, we may see the pair threaten interim support around the 0.7880, and a break and a close below the key figure will reinforce our bearish outlook for the euro-pound as we anticipate to see fresh yearly lows in the exchange rate.

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