EUR/GBP: Euro is gaining ground as Powell’s speech notes are released

• Fed chairman Jerome Powell to speak in Congress in his speech released at 13:30 GMT.
• Bundesbank president Jens Weidmann sees positive growth outlook regarding the Eurozone.

The EUR/GBP is currently trading at around 0.8835 up 0.23% on the day ahead of Powell’s Congressional testimony at 13.30 GMT that represents the key risk event for the global FX markets.

The main event of the week is the Federal Reserve Chairman Jerome Powell’s Congressional testimony on the state of the US economy and the outlook on monetary policy, with market participants worldwide anxiously waiting for clues. The event is likely to affect all major forex pairs.

Earlier on Tuesday, the Bundesbank president Jens Weidmann confirmed that the ECB monetary policy will stay highly accommodative even in case of the QE ending. Going further, Weidmann said that the recent strength seen in the Euro is unlikely to change the policy stance as it is having a much lower impact on inflation compared to the past.

The key Brexit event is scheduled for Wednesday, February 28, 2018, with the European Union publishing a draft Brexit withdrawal treaty that is set to be very explosive ignoring Theresa May’s recent requests about the transition and risks prompting a domestic crisis over the sensitive issue of the Irish border.

With the EUR/GBP currently trading around 0.8835 level, the technical resistance is seen at the 200-period SMA on 1-hour chart at 0.8840. Next key resistance is seen at 0.8860 which is a 23.6% Fibonacci retracement from the January 25 to February 14 bullish trend. Further up the key resistance is 0.8920 which is the cyclical high of the last month.

To the downside, 0.8820 figure in conjunction with the 100-period SMA should provide support. The next key support is seen all the way down to 0.8770 cyclical low.

EUR/GBP: 1-hour chart