The euro sterling exchange rate (EUR/GBP) has taken a knock following the release of economic sentiment data out of the Eurozone. Germany in particular missed the mark. The forecast continues to favour the pound sterling over the euro.
The euro headed lower against the pound sterling in mid-morning in London after it was shown the Eurozone ZEW Survey for Economic Sentiment (Jan) beat expectations coming in at 73.3, markets had priced in a rise to 70.2 from December's 68.3.
But, Germany has missed the mark and this should hamper any EUR gains. The German number came in at 61.7, below expectations for 64, and this is actually below December's 62. Losses are most acute against the GBP at present.
Today's Euro Exchange Rates
The euro to pound sterling exchange rate is trading 0.24 pct in the red at 0.8229 at 10:14 in London.
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The euro pound sterling over the past 24 hours
While Friday’s UK retail sales numbers were much stronger than expected, it is no big surprise that they haven’t led to more sustained GBP gains, as the Q4 retail sales outcome was still only a rise of 0.4%, and there is no necessary implication for Q4 GDP.
Even so, analysts at Lloyds Bank Research still see some value in GBP on a dip, particularly against the Swiss Franc and the Euro. "The strength of UK growth and the declining trend in unemployment does suggest the possibility of a steady widening of yield spreads in favour of the GBP," say Lloyds Bank.
There will be interest in today’s CBI industrial trends survey for any indications on the momentum of the economy in January, but the focus will mainly be on tomorrow’s labour market data.
"A dip in the unemployment rate to 7.3% would provide further support to the GBP bull case. We would not expect anything from the MPC minutes to discourage this at this stage," say Lloyds.
Forecast for euro sterling exchange rate
"EUR/GBP is in a downtrend, the market sentiment is bearish, and players are looking for more reasons to sell," says Sean Lee at FXWW who has an open trading position on this pair.
ICN Financial say:
"The pair is stable around the support of the main Falling Wedge shown on graph at the time Stochastic enters oversold areas supporting the upside rebound from those areas targeting 0.8385 areas. Breaching the resistance will extend the gains toward 0.8570, while a break below 0.8215 will push the pair to test the critical short-term support at 0.8165.
"Based on the above, buy the pair above 0.8215 targeting 0.8290 then 0.8355 and stop-loss below 0.8165."
"EURGBP consolidates losses below the 30-min daily cloud top (1.82550). We keep our key support at 0.8220/25 (2013-2014 downtrend channel bottom / Dec 2012 double top), if broken should open the way to our 0.8160 target (fibo 61.8% on July 2013 - Feb 2013 rally). We remain sellers on rallies for a daily close below 0.83000," says Ipek Ozkardeskaya at Swissquote Bank.