Short-term Forecasts Favour the Euro

The key event for this pair today comes in the form of Eurozone July Consumer Confidence data, consensus estimates are for a reading of -17.4, any readings either side will likely move the euro. We would suggest that it would need to be quite a large deviation from conensus estimates in light of the current reluctance to do anything ahead of this week's ECB meeting.

Commenting ahead of the data, Lloyds Bank say:

"Euro area consumer and industrial confidence data for July are also released this morning. Despite rising unemployment, household confidence has shown a steady improvement since 2012Q4 and we expect the final July estimate to be unchanged from its preliminary counterpart of -17.4. Euro area industrial confidence has also rebounded since late last year but its  recovery has been more tentative.

"Nonetheless, amidst signs  that the euro area recession is bottoming out and improving prospects in Germany and France we expect the index to rise from -11.2 in June to -7.5 this month."

From a technical perspective…

Technical forecasts from KBC Markets cite a resistance level that should keep a cap on proceedings for EUR/GBP:

"More technical trading ahead of Thursday’s BoE meeting and end of month hedging might set the tone. The day-to-day momentum turned less positive on sterling but we don’t expect a major setback. The 0.8711 resistance still look quite safe for now."

Trading Central have today told clients that in the short-term we should expect further gains for the euro:

"Long positions above 0.8615 with targets @ 0.8655 & 0.8675 in extension.

"Alternative scenario: Below 0.8615 look for further downside with 0.86 & 0.858 as targets.

"The pair remains on the upside and is challenging its resistance."