EUR/GBP Sees Downside Pressures Making a Return
Downside pressure on the euro could be making a return following the relief seen towards the close of the previous week.
At present, the EUR/GBP’s conversion rate is around 0.7175.
The declines in the euro come on the back of two under-par economic releases from the Eurozone. Sentix investor confidence index read at 15.7, which is higher than the 15.1 reading in November but below what investors were expecting.
German industrial data saw a rise of 0.2% but this was less than the expected 0.7% increase the markets expected.
It will be a quiet economic week for the EUR after last week’s cacophony; thus, its movement will be largely affected by external and technical factors (see more below).
GBP Shows Resilience against the Euro
Despite its retreat against USD, the British pound has shown renewed strength against the EUR.
On Tuesday markets negotiate UK November industrial production data and October manufacturing production. A figure of -0.1% is expected.
Then on Thursday December 10, the markets’ attention will be on the UK trade balance and the Bank of England’s (BoE) rate decision.
It is widely expected that the BoE will leave rates untouched. Money markets are presently pricing in the first interest rate rise in 2017 but any suggestions that this date will be brought forward will provide support to sterling.
The minutes and bank officials’ comments will be closely monitored for any new information.
EUR/GBP Technical Outlook: Bearish Consolidation
The pair has fallen through a range of moving average support levels but according to Lloyds Bank, a decline through support at 0.7145 and then 0.7110 is needed to turn more bearish.
Swissquote states, “EUR/GBP is consolidating after the pair has spiked last week. Hourly support is given at 0.6982 (17/11/2015 low).
“The technical structure suggests that a downside momentum may be back. Expected to show further consolidation.
“In the long-term, prices are in an underlying declining trend. The general oversold conditions suggest a limited medium-term downside potential. A key resistance lies at 0.7592 (03/02/2015 high).”
