Outlook for the Pound: EUR/GBP Bearish Theme Continues; Eventual Decline Towards 0.8411-0.8398 Predicted
A look at Friday's foreign currency market action shows the following scene:
The Pound to Euro exchange rate is 0.07 pct lower on a daily basis at 1.1702 on Friday morning in London.
The EUR/GBP is at 0.8545.
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The outlook remains bearish
We have two short-term euro pound exchange rate outlook notes on Friday morning.
Gareth Berry at UBS tells us the bias for EUR/GBP is bearish:
"The sharp sell-off over the past few sessions was staged from the resistance at 0.8669. This reinforces the bearish theme and first support is at 0.8505, a breach of which would expose 0.8467."
Luc Luyet at MIG Bank sees the potential for some heavy declines:
"EUR/GBP is once again testing daily trendline support.
"We now seek a break under 0.8505 (15/08/2013 low) under which will likely trigger a continuation of weakness and a push under the 200 day moving average, which currently rests at 0.8479. Weakness is anticipated to ultimately take price back into the region near 0.8300.
"As long as prices do not decisively break the resistance at 0.8623, the technical configuration since the annual high at 0.8815 is viewed as a part of a larger corrective phase which should eventually decline towards the 0.8411-0.8398 (26/04/2013 low) region and possibly even lower."
BCC upgrade economic forecast for UK
The Pound Sterling was underpinned on Friday after the British Chambers of Commerce has sharply upped its 2013 growth forecast, saying the economy is gaining momentum.
The business lobby group now expects 1.3% growth this year, up from 0.9%. Its forecasts for the next two years were upped to 2.2% and 2.5%.
But the BCC also warned of overseas risks to the more positive outlook, notably those posed by the eurozone, the Middle East and China's slowdown.
Eurozone data today
The Euro has meanwhile seen recent losses contained by a slew of mildly positive data releases toady.
Consumer Confidence (Aug) came in at -16, ahead of expectations for -16.5.
The Business climate indicator, released by European Commission, gave a reading of -0.2 versus predictions of -0.35.
The Economic Sentiment Indicator (Aug) beat expectations for a reading of 93 by delivering 95.2.
Industrial Confidence (Aug) came in at -8 versus -9.9.
Consumer Price Index (YoY) Preliminary came in at 1.3 pct, expectations were for 1.4 pct.
Unemployment Rate (Jul) came in at 12.1 pct.