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EURGBP extends strong rally into second straight day and hit the highest in 4 ½ months on Monday, as the pound was hit by dovish comments from BoE officials, who shifted their initial view and expect inflation to ease further and remain around the central bank’s 2% target for next couple of years.

The pair was up 0.38% this morning, in extension of Friday’s 0.7% advance, which generated several bullish signals on break and close above Ichimoku cloud (top at 0.8587) and 200DMA (0.8604).

Fresh bulls cracked next pivotal barrier at 0.8631 (Fibo 61.8% of 0.8714/0.8498), with sustained break here to add to bullish signals and further strengthen near-term structure for extension towards target at 0.8663 (Fibo 61.8%).

The price so far do not show any signs of fatigue despite overbought conditions, though some corrective action should be anticipated in coming sessions.

Broken 200DMA reverted to solid support (0.8605) which should keep the downside protected.

Res: 0.8640; 0.8663; 0.8700; 0.8715.
Sup: 0.8605; 0.8580; 0.8572; 0.8550.


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