EUR/GBP stays pressured near 23-month low as traders await ECB, BOE

• EUR/GBP remains on the back foot for the fifth consecutive day.
• Brexit, political optimism in UK joins hopes of BOE rate hike to favor bears.
• Eurozone Q4 GDP, German HICP will direct intraday moves.
• EZ CPI will decorate calendar on Wednesday ahead of Thursday’s ECB, BOE.

EUR/GBP grinds lower around 0.8320, down 0.06% intraday heading into Monday’s European session.

In doing so, the cross-currency pair prints a five-day downtrend while staying near the lowest levels marked since February 2020 before the key monetary policy meetings of the European Central Bank (ECB) and the Bank of England (BOE).

It’s worth noting that the recently stronger data enable market players to stay more hawkish on the BOE than the ECB.

On an intraday basis, EUR/GBP traders await the preliminary readings of the Q4 Eurozone GDP, expected to rise to 4.7% YoY versus 3.9% prior, will precede Germany’s first readings of the Harmonized Index of Consumer Prices (HICP) for January, forecast -0.4% versus +0.3% prior.

Other than the pre-data caution and central bank-linked moves, optimism that UK PM Boris Johnson will stay as the national leader despite the recent allegations over the covid-linked performance also weigh on the EUR/GBP prices. On the same line were hopes of 1 billion pounds ($1.3 billion) of benefits from the Brexit Freedoms Bill that recently reached parliament to tackle Brexit red tape. Furthermore, the UK’s lowest covid cases in seven weeks also help the pair sellers.

Alternatively, recently hawkish comments from the ECB policymakers and inflation fears join geopolitical concerns to keep the EUR/GBP pair buyers hopeful.

Ahead of the BOE, FXStreet’s Yohay Elam said, “A rate hike is priced in, and if the BOE settles for only that action, GBP/USD could suffer a "buy the rumor, sell the fact" retreat. Therefore the pound will probably fall in the unlikely case that the BOE sits on its hands.”

On the other hand, Danske Bank said, “While we do not expect the meeting to bring significant new signals to the market, attention to the elevated inflation and even more data dependence, as well as the difference to Fed, will be in focus.”

Technical analysis

Unless refreshing the monthly high near 0.8422, EUR/GBP remains vulnerable to break the 0.8300 threshold while eyeing lows marked during 2020 and 2019.