Pound Boosted by UK Trade Data + Latest Forecasts for British Pound versus the Euro
Anyone hoping that today's trade balance data would provide an excuse for a bout of GBP profit-taking will likely be disappointed.
The Total Trade Balance for June came in at £-1.548B; a good number if we consider consensus estimates were for a reading of £-2.350B. This is a big improvement on the £-2.612B reading delivered previously.
The Goods Trade Balance for June narrowed to £-8.082B; better than expectations for £-8.500B.
The immediate reaction of sterling/euro to the numbers can be seen below:
RBS favour gains for GBP over EUR
Today we hear from Paul Robson at RBS who says Wednesday's Inflation Report from the BoE should see GBP advance against the EUR.
Robson says:
"We see greater scope for GBP to strengthen over the short-term against the EUR than the USD. Given today's announcement and the level of inflation in the Euro area, the pressure on the ECB to keep policy accommodative is far greater than it is for the BoE or the Fed.
"While the BoE's forward guidance was more dovish than expected given the Q3:16 reference to the new unemployment rate Threshold Target of 7%, the conditionality is more constraining and this makes the overall tone less dovish than it seemed at first cut. The BoE has given itself far less room than expected on its Threshold Target.
Euro Pound Exchange Rate Technical Forecasts
Turning to the technical forecasts for EUR/GBP FX Street tell us further losses for the Euro could be on the cards:
"EUR/GBP has been a muted play towards the end of this week, with very little there to give holiday markets the impetus or any stimuli to much with.
"As the end of the week draws in, traders will be mostly looking out for next weeks BoE minutes to offer some further, hopefully, direction and clarity on the forward guidance that actually came a little vague from Carneys Inflation Report.
"EUR/GBP is sidelined and failure here could open up losses back to 0.8493. The 20 dma is 0.8644, the 50 dma is 0.8584, and the 200 dma comes 0.8438. RSI (9) reads 43.20. Supports are ascending from 0.8464, 0.8512, 0.8550, 0.8575. Spot is currently 0.8606 while resistances are 0.8730, 0.8745, 0.8770, 0.8815."
MIG Bank: EUR/GBP to Decline to 0.8439
Luc Luyet gives his latest Euro Pound exchange rate forecast:
"EUR/GBP has continued to weaken after peaking at 0.8770 (01/08/2013). This is now likely the lower high that we had been anticipating, with scope for a medium term return to the 200 day moving average, currently at 0.8439 and then on towards 0.8398 (26/04/2013 low)."