• The Euro trims gains after failure at the 0.8860 resistance area.
• The Poundnappreciates across the board amid a softer USD.
• Longer-term, the pair remains positive, with the GBP weighed after BoE's dovish hike.

The Euro has been unable to breach the 0.8860 resistance area on Wednesday. The pair retreated to 0.8800 at the moment of writing, retracing Tuesday’s gains,  and is on track to put an end to a five-day winning streak.

The pound picks up on a quiet market session

The Sterling is trimming losses on Wednesday, underpinned by a mild recovery on the GBP/USD, as the US Dollar loses ground across the board in a thin market session and amid a moderate appetite for risk.

In absence of key macroeconomic releases, investors remain moderately upbeat following news that the Chinese authorities are set to end the restrictions for inbound travelers, which is expected to accelerate economic recovery in the major Asian economy.

On a longer-term perspective, however, the Pound remains on the defensive, with the EUR/ GBP nearly 3% up in the last two weeks.

The Bank of England hurt GBP demand after slowing down its tightening cycle after its December monetary policy meeting. The BoE hiked rates by 0.5%, following a 0.75% hike in November, with two out of the nine committee members voting to leave rates unchanged. This has boosted speculation about a softer normalization phase in 2023 and possibly a lower interest rate peak.

Technical levels to watch