Interest in the January meeting of the ECB increased after the minutes of the December meeting surprised the market by stating that the Governing Council may revise its bias regarding the asset purchase program "at the beginning of the year", which is earlier than expected so far. From that moment, the central bank has to fight with speculation, but it is not easy when economic data remain strong and deny the need to maintain ultra-soft policy for a long time. On the other hand, granting the market a risk of firing a shot at the euro, which may weigh heavily on the outlook for inflation and will bury the chances of achieving the 2.0% target. in the medium term. The most recent estimates say that the EUR / USD rally lasting since the last bank meeting in December will translate into lower inflation forecasts for 2018 and 2019 by around 0.2 percentage points. Thus, the ECB will probably look for a way to emphasize the dovish attitude, even if at the same time it wants to leave flexibility for later changes based on economic developments (in order to reconcile the dovish and hawkish members of the ECB Governing Council). This means repeating in the message that the QE program will last at least until September and that interest rates will not change long after the asset purchase is completed. If the ECB is actually considering changes in the forward guidance, the March meeting may also be considered the "beginning of the year", where the Governing Council will additionally have new forecasts available to the economy.
The European Central Bank will publish its decision and statement on Thursday 24 January at 12:45 pm GMT. The global investors do not expect any changes in the parameters of monetary policy (the reference rate: 0.0%, deposit rate: -0.40%, asset purchase amount: EUR 30 billion / month). At 13:30 pm GMT a press conference of the President of the ECB, M. Draghi, is scheduled.
Let's now take a look at the EUR/GBP technical picture at the H4 time frame. The market has broken below the technical support at the level of 0.8732 and is currently in the demand zone. The next key technical support is seen at the level of 0.8688 and the strong momentum is indicating a possible test of this level soon. Please notice the overbought market conditions.
