Bulls Regain Control Following Double Bottom Support

Forex Economic

Summary:

Given the defense of the double bottom, the path of least resistance currently favors the bulls.

Buy EURGBP

End Time

CLOSED

0.86415

ENTRY

0.86710

TGT

0.86150

0.86236 -0.00043 -0.05%

265

Points

Loss

0.86150

CLOSING

0.86415

ENTRY

0.86710

TGT

Market participants are now fixated on the Bank of England’s (BoE) interest rate decision, scheduled for this upcoming Thursday. Until recently, investors had assigned nearly equal probabilities to a potential rate cut in March; however, the resurgent volatility in crude oil prices—triggered by intensifying geopolitical friction in the Middle East—has effectively neutralized that possibility. Under prevailing conditions, the market consensus overwhelmingly suggests that the benchmark interest rate will remain anchored at 3.75%.

The previous policy meeting in February was defined by a razor-thin 5-4 vote in favor of maintaining the status quo. Consequently, the degree of internal dissent within the Monetary Policy Committee (MPC) will be a critical barometer this week. Analysts will be closely monitoring how policymakers weigh the visible deceleration of the domestic economy against the resurfacing threat of energy-driven inflation.

The fundamental backdrop remains exceptionally nuanced. On one hand, the British labor market is exhibiting clear signs of structural fatigue, with the unemployment rate ascending to 5.2%—its highest level in five years. Conversely, services sector inflation delivered a hawkish surprise by reaching 4.4% in January, significantly overshooting the BoE's internal projections. While Governor Andrew Bailey has previously characterized the March decision as a “genuinely open question,” the recent appreciation in energy costs has significantly restricted the central bank's maneuverability regarding short-term policy easing.

Simultaneously, Eurostat recently confirmed that Core HICP inflation for February recorded a monthly advance of 0.8%, aligning perfectly with preliminary estimates. On an annual basis, the core figure remained steadfast at 2.4%, matching the broader market consensus. Similarly, the headline HICP rose by 0.6% month-over-month, while the annual rate held steady at 1.9%, successfully fulfilling initial projections and sitting just beneath the European Central Bank’s (ECB) mandated 2% target.

Despite headline inflation nearing its target, the recent surge in global oil prices—precipitated by intensifying tensions between the United States, Israel, and Iran—introduces a new layer of inflationary risk. This volatility may compel ECB policymakers to reconsider their current stance in favor of a more hawkish bias. However, the institution faces a dual-edged sword: while rising energy costs threaten price stability, they simultaneously pose a significant headwind to Eurozone growth due to the region's structural dependency on energy imports.

Regarding the upcoming policy deliberation, the ECB is widely expected to maintain its three primary interest rates at current levels. Market participants will be laser-focused on forward guidance, seeking clues regarding the future trajectory of monetary policy. Prior to the escalation in the Middle East, investors anticipated a period of stability extending into 2026; however, the recalibration of energy risks has led markets to begin discounting the possibility of a rate adjustment as early as July. Bulls Regain Control Following Double Bottom Support_1

Bulls Regain Control Following Double Bottom Support_1

Technical Analysis

From a technical perspective, EUR/GBP appears to be establishing a price base at the 0.8628 handle. This price action follows a successful rejection of the structural double bottom established at 0.8618 on February 4. As long as this floor remains intact, the technical setup suggests a renewed bullish impulse targeting the primary resistance zone at 0.8671.

Furthermore, the daily 100 and 200-period Moving Averages (MAs) are currently tracking at 0.8723 and 0.8701, respectively. In the near-term horizon, these dynamic levels are likely to undergo a period of compression, potentially converging with the price action to create a high-confluence resistance cluster should the bullish move extend toward the 0.8700 handle.

Our analysis of momentum oscillators provides further validation for an upside bias. The RSI is currently situated at the 50 level, hovering in neutral territory. This indicates that the bullish recovery maintains significant "runway" for further expansion before reaching overbought extremes. Simultaneously, the MACD is printing a bullish histogram, although the bars have shown a slight contraction in depth.

A decisive crossover of the signal lines toward the neutral baseline, accompanied by an expansion in the positive histogram, would provide the necessary technical confirmation for a sustained upward move. Given the defense of the double bottom, the path of least resistance currently favors the bulls.

Trading Recommendations

Trading direction: Buy

Entry price: 0.8640

Target price: 0.8671

Stop loss: 0.8615

Validity: Mar 27, 2026 15:00:00

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