GBP/EUR exchange rate: Weekly forecast shows rejection of 1.1695 is significant pro for GBP

At the start of a new week we see the pound to euro exchange rate trading 0.2 pct up on Friday night's closing level at 1.1733.

The euro pound exchange rate is thus at 0.8523.
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Is the rejection of the 200 day Moving Average a significant victory for GBP?

Shaun Osborne at TD Securities has suggested that the inability of the euro to break above the 200 day moving average (MA) is a significant pro for sterling:

"EUR/GBP is pressuring the 200-day MA but a clear break higher remains elusive and price action looks potentially negative after last week's bearish “shooting star” signal peak coincided with a test of the 50% retracement resistance (derived from the 0.8770/0 0.8330 move down). Create your own EUR/GBP chart here.

"We have no strong views here at the moment but note that the 200-day MA has been a decent bellwether for the market in the recent past and the rejection of the 0.8550 area looks quite emphatic, even with today’s better bid tone. More broadly, September/October price action may be corrective and forming a bear wedge (bearish below 0.8486 currently)."

Meanwhile, analyst Piet Lammens at KBC Markets says the recent strength of the EUR has lead him to question his bear case on the euro to pound exchange rate:

"We had a negative bias for EUR/GBP and were waiting for the correction to run its course. However, the pair moved above the 0.8500/10 resistance last week (see graph, arrow) , questioning our ST negative bias for EUR/GBP."

Perhaps today's positive GBP action will see Lammens reassert his negative euro pound exchange rate forecast?  

Foreign exchange rates to be driven by Fed expectations this week

Turning to the forex markets at the start of this new week, we note the focus shifts to October 29/30th FOMC meeting.

Fed expectations are clearly dovish given the weak jobs data and the recent budget turmoil (still unresolved in the long run).

"Fed is likely to not start tapering before the beginning of 2014; we push our target to March 2014 given the economic setting and the fragile US recovery. Walking through FOMC decision due on Wednesday, the USD consolidates weakness. DXY hit 79.998 on Friday, a stone’s throw higher than the year low of 78.918; the speculative long positions retreated to the lowest since February 2013, according to the CFTC data. Given the range-trading in the FX markets, we will recapitulate the SNB policy, talk about the strengthening CHF and share expectations," says Ipek Ozkardeskaya at Swissquote Bank.