Immediate outlook favours EUR/GBP gains to 0.8675

The immediate outlook for EUR/GBP has turned bullish following recent price action, analysts at Trading Central say they are forecasting a move higher in EUR/GBP towards 0.8645 and 0.8675.

However, Trading Central say, "below 0.858 look for further downside with 0.8555 & 0.8525 as targets. A support base at 0.858 has formed and has allowed for a temporary stabilisation."

Boris Schlossberg at BK Asset Management says that today's GDP data release need to beat expectations to afford sterling some fresh momentum:

"Both euro and cable were lower in morning European trade after economic data from the region simply matched investor expectations, spurring a profit taking selloff that send EUR/USD below the 1.3200 level and GBP/USD below 1.5300.

"In Germany the IFO survey increased to 106.2 from the 105.9 the month prior but the expectations component came in a little bit weaker at 102.4 versus 102.5 expected. Given the sharp improvement in yesterday's PMI readings the market was primed for a bigger upside surprise and failing to obtain it, traders sold the EUR/USD on the news pushing it to a low of 1.3165 before finding support.

"As similar dynamic dominated trade in the GBP/USD which tumbled through the 1.5300 level to hit a low of 1.5263 before finally stabilizing. UK GDP printed at 0.6% - just in line with expectations - but currency traders were clearly looking for more given the recent string of upside economic surprises.

"UK GDP showed improvement across nearly all categories with services output rising up 0.6% and manufacturing output increasing 0.6% versus 0.5% and 0.3% the quarter prior. The only noticeable decline was in government and other services which dropped to 0.1% versus 0.4% in Q1.

"The overall economic picture shows clear pick up in economic activity that is likely to persist for the foreseeable future. Cable however may have gotten a little ahead of itself as it raced towards the 1.5400 level over the past several days and today's correction is a sign that the pair may need to consolidate its rally and could decline towards 1.5200 as the day progresses if dollar continues to be bid."