Despite the fact that the monetary policy divergence between the BOE and ECB is wide (and potentially going to widen), EURGBP has put in a very strong move.

EUGBP has been a great central bank trade for me. From the UK recovery from 2013, which put a hawkish emphasis on the BOE, versus Europe still dragging along the floor and the ECB taking the QE road, trading monetary policy divergence couldn't have been any simpler.

There's been several pulling forces in the pair. The UK recovery and the expectation building up from late 2014 and through 2015 that the BOE could hike, and the ECB taking easing further. Over all that time the reality has been that the BOE has done nothing with rates while the ECB has continued to ease. So why has the direction turned?

Now the pull is different. The UK rate forecasts have been kicked out into the next millenium and the Brexit shadow looms large. That it's ignoring what the ECB could do in March, to further widen the gap with the BOE, is a trade in itself.

So with that risk in mind it's clear that the price action is telling us that the pound is the driver in this move, not the euro.

We're getting closer to the ECB meeting and trend in this pair is showing no signs of stopping.

A look at the weekly chart shows us that we're approaching some strong resistance levels.

EURGBP weekly chart

First up is the 200 wma at 0.7940. The main area I'm interested in is up at 0.8000 and more so 0.8030. This was the area I sold back in 2014 for the run down to 0.7000. The level had been a strong historical one and was twinned with the psychological 0.80 level. The resistance that formed in that area was exactly what I look for when trading a break. There was a lot of sweating in waiting for the move to really crack lower but the resistance played it's part and kept the trade on track.

It's that resistance that is going to be worth watching once again and looks a great spot for a short trade again. The 38.2 fib of the 2008 move bang on 0.8030 as is the 55 mma (I won't squabble about the 5 pip difference of it being at 0.8025). Those weekly highs add to the resistance that is squeezed in below the 61.8 fib of the 2012 move at 0.8096. They look even better on the monthly chart.

Technically it looks fantastic and it's all packed into a 100 pip range. That gives us various levels to scale in at and keep risk well managed. It also gives us a clear stop point above 0.8100.

I'm going to look to start shorting it just ahead of 0.80. If we get there ahead of the ECB meeting, all the better as there might be the possibility of catching some action if this pair is ignoring that risk. I'm not so keen on sitting in this one as long as my last short as the playing field is different now. A first target would be around the support at 0.7760. I'll look to add at the other levels and I'll look to throw it in if we break 0.8100-0.8150, at the widest.