EUR/GBP stalls around 0.8450 and retraces under the 100-DMA below 0.8400

• The shared currency retraces from weekly highs as tensions between Russia-Ukraine increase, to the detriment of the EUR.
• Market sentiment alongside the BoE hiking rates for the third consecutive meeting favors the GBP vs. the EUR.
• EUR/GBP Price Forecast: Neutral-downward biased, as long as the pair trades above 0.8359.

On Tuesday, the EUR/GBP retreats from weekly highs near the 0.8450 mark and breaks below the 0.8400 mark amidst a mixed market mood, spurred by geopolitical woes. At press time, the EUR/GBP is trading at 0.8396.

Russia-Ukraine tensions increase

The market sentiment is mixed, though it would likely shift towards a risk-off on Russian President Vladimir Putin’s saying that Kyiv is not serious to find a mutually acceptable solution, contradicting with news in the couple of days, which appointed to progress in discussions between Kyiv and Moscow.

Overnight, the EUR/GBP climbed towards 0.8400 from the 0.8400 figure. However, the Russia/Ukraine conflict and its influence on Europe increased demand for the British pound. Since the mid-European session, it has been appreciating vs. the shared currency, causing a move under the 0.8400 mark.

Therefore, EUR/GBP traders would need to be aware of central bank policy divergence, with the Bank of England (BoE) set to raise rates to 0.75% by Thursday, while the ECB could probably begin by the end of the year. That alongside market sentiment would be the main drivers for the pair, though, during the week, GBP strength could override some market mood vs. the EUR.

EUR/GBP Price Forecast: Technical outlook

The EUR/GBP depicts a neutral-downward bias, confirmed by the location of the daily moving averages (DMAs) above the spot price, except for the 50-DMA. Furthermore, Tuesday’s daily high, around 0.8455, failed to break above the last cycle high at 0.8478, extending the downtrend, which has been following the 100-DMA s direction since May of 2021.

That said, the EUR/GBP’s first support would be the confluence of the 50-DMA and the March 11 low around the 0.8355-0.8359. Breach of the latter would expose the bottom-trendline of a descending channel around 0.8340, followed by the February 21 daily low at 0.8309, short of the 0.8300 mark.