"I'm chronically bearish on this pair" says one commentator

Euro Pound Exchange Rate Stages Relief Rally

Sean Lee at FXWW says he is bearish on the Euro Pound exchange rate, but like many, he struggles to call the exact timing of such bearishness:

"I’m chronically bearish on this pair but have found it very difficult to get the timing right. I’m dipping my toes in the water again and have taken a small short position at .8535. There are large stops reported below .8500, let’s see if they tempt the interbank dealers late in the week."

Leander Dreyer at Jyske Bank says the hefty losses witnessed in EUR/GBP could be coming to an end for the time being:

"EURGBP is about to reach a series of strong support levels in the range of 84.90-85.10. Now it will take some news to trigger a breakout to the downside.

"In the short term, EURGBP trades in oversold territory, and therefore we expect that in the short term EURGBP will trade back towards the level at 86.30-86.90.

"We recommend that investors place a sell order at 86.20 to catch EURGBP before the next weakening phase begins."

Euro Dollar: "We remain sellers"

Turning to the headline Euro Dollar exchange rate we see further consolidate prices action.

Shaun Osborne at TD Securities says:

"EUR/USD has spent the night consolidating yesterday’s gains along with the rest of the majors, with little regard for a soft, but on-consensus EZ inflation report.

"Earlier this week we pointed out the long term resistance zone in the mid– to upper-1.33 area on the weekly charts, and that is exactly the consolidation zone where the pair has been hovering since yesterday afternoon.

"We remain sellers at these levels, but in the case that today’s close is notably above current levels, there would be an increased chance of a further squeeze higher."

Fundamentals: German manufacturing forecasted to pick up

According to Germany's Ifo, manufacturers look set to increase their investment in 2013 versus last year, according to the results of the latest Ifo Investment Survey for manufacturing.

This investment will be focused on expanding capacity, especially with a view to changing and/or expanding the product range.

In the wake of the euro crisis German manufacturers' sales to Eurozone countries dropped significantly in 2012 and capacity utilisation remained far below 2011 levels.

Investment by manufacturers nevertheless increased by another 5%. Most of the investment in manufacturing (87%) was used for equipment acquisition, while the remaining 13% was used for investment in construction.

"Significant increases in investment were mainly reported by the automotive manufacturing, mechanical engineering, chemicals and electronic equipment manufacturing segments" explains Prof. Dr. Kai Carstensen, Director of the Ifo Center for Business Cycle Analysis and Surveys.

54% of manufacturing survey participants reported plans to invest more than the previous year in 2013, 45% wish to reduce their investments and one percent of survey participants intend to keep their investment expenditure at a constant level.

Calculations based on the figures obtained in the investment survey suggest that investment should increase by 4% versus 2012.