(MENAFN- Daily Forex)

• The euro extended gains against the British pound on Wednesday ahead of the ECB's rate decision.
• After breaking above key resistance at 0.8750, the pair targets 0.89, reflecting ongoing pound weakness rather than euro strength.

The euro continued to rally against the British pound during the trading session on Wednesday as markets awaited the European Central Bank interest rate decision on Thursday. It is worth noting that the pair broke above a major resistance barrier at 0.8750, a region that had acted as a ceiling in this market for a long time. Having previously consolidated within a 150-pip range, the so-called measured move suggests a potential advance toward the 0.89 level, an area that makes sense historically.

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Over the longer term, the 0.89 level has proven significant on multiple occasions, creating a favorable technical setup. That said, the ECB decision could introduce volatility into the market, though any such movement should be short-lived unless the central bank delivers a genuine surprise. What stands out is that the British pound itself has been relatively weak in recent weeks, and this pair's movement may reflect sterling's softness more than any particular demand for the euro.

EURUSD Chart by TradingViewA Pullback Offer Value in this Pair

A pullback could present a buying opportunity, with 0.8750 expected to serve as a short-term floor. A dip toward that level would likely offer an attractive entry, though the market could simply continue higher. There appears to be little reason to short this pair unless the ECB delivers an unexpected shock, which seems unlikely at present. The euro has been in an uptrend since at least June, and even when viewed from a broader perspective-with some sharp corrections along the way-the prevailing trend remains higher. Accordingly, the 0.89 level appears to be a realistic target for the near term.

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