On Tuesday, Bank of England Governor disrupted speculation that he would support higher interest rates. Delivering his Mansion House speech, the BOE head highlighted that inflation pressures are subdued and wage growth is anemic.
Carney’s stance shows that he is not yet ready to join MPC members Forbes, McCafferty and Saunder's call to raise rates. Recent data in April showed that weekly earnings printed its 5th straight slowing of data and slowest pace since 2015.
The EUR/GBP daily chart shows the recent bullish ABCD pattern form mid-April is still valid. Point D is confirmed just ahead of the 141.4% Fibonacci expansion level of the B to C move. Price has now had another round of strong buying following the May 10th low. Price has is now trending above all three key SMA(s). If the bullish move gains momentum, further upside could target the November 9th high of .9024. If we see another leg higher, we could see a test of the .9077 to .9128 region. Major support remains the .8650 level.
The trade: Buy EUR/GBP at .8750, with a stop loss at .8650 and a take profit at .9050. The Risk/Reward Ratio is 1: 3