EURGBP gains for a second consecutive day as dovish remarks from Bank of England officials weaken the pound

EURGBP extends its strong rally into a second straight day, reaching its highest level in 4.5 months on Monday. The pound weakened due to dovish comments from Bank of England officials, who revised their outlook and now expect inflation to ease further and stay around the central bank’s 2% target for the next couple of years.

The pair increased by 0.38% this morning, following a 0.7% gain on Friday. The move generated several bullish signals, including a break and close above the Ichimoku cloud top at 0.8587 and the 200-day moving average at 0.8604.

Fresh bullish momentum pushed through the next significant barrier at 0.8631 (Fibonacci 61.8% of 0.8714/0.8498), and a sustained break here would strengthen the bullish outlook and set the stage for a move towards the target at 0.8663 (Fibonacci 61.8%).

Despite overbought conditions, the price action has shown no signs of fatigue. However, some corrective movement could occur in the coming sessions.

The broken 200-day moving average has reverted to solid support at 0.8605, which should offer protection against downside risk.

Res: 0.8640; 0.8663; 0.8700; 0.8715

Sup: 0.8605; 0.8580; 0.8572; 0.8550