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David Song

We’re still on the sidelines with the EURGBP as pair rallied to a fresh monthly high of 0.8131, but we will look to sell ahead of the European Central Bank (ECB) and Bank of England (BoE) interest rate decisions as we anticipate ECB President Mario Draghi to adopt a more dovish tone for monetary policy. As the BoE is widely expected to maintain their current policy, market participants may show a fairly muted reaction to the UK rate decision, but comments from the Monetary Policy Committee may instill a bullish outlook for the sterling as the central bank appears to be slowly moving away from its easing cycle. In contrast, the ECB may show a greater willingness to lower the benchmark interest rate further as the deepening recession threatens price stability, and the fresh developments coming out of the meeting may trigger a sharp reversal in the EURGBP amid the deviation in the policy outlook.

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