EUR/GBP: most will depend on the UK data this week, a trio beat is required.
EUR/GBP: BoE continues to weigh on the outlook for the pound, what will the week bring?
After running up to a fresh six week high in early European trade/Asia handover, EUR/GBP has run into supply through the 0.88 handle and is losing sight of it quickly while now trading below prior 0.8795 resistance level. Currently, EUR/GBP is trading at 0.8773, down -0.31% on the day, having posted a daily high at 0.8830 and low at 0.8765.
EUR/GBP was weighed by softer German retail sales, (German retail sales fall 0.6% mm in March compared to a 0.8% forecasted), and EZ M3 data, (the lowest point since November 2014 at 3.7%, M3 compares to a 4.1% forecasted and is well below the ECB’s 4.5% reference rate), while the euro dropped below the 1.21 handle. However, sterling has also had a poor run of things and extended lower to a fresh new 8-week low of 1.3712 in European/London trade while the recent and dovish shift in BoE expectations continues to weigh on the pound.
The bears need a trio beat from UK data this week
Eyes are now on April’s Markit/CIPS UK PMIs and after a series of data misses of late, these will be critical while the pound has already lost over 600 pence in just over ten days. A trio of beats is what is required to keep the BoE May 10th meeting on traders radars for a possible rate hike; Data starts tomorrow with manufacturing, then construction Wednesday and then services on Thursday.
The 100-D SMA has capped the reversal of the early March sell-off from 0.8967 down to 0.8620. a firm close above the 21-W SMA at 0.8811 is required if the bulls are going to fend off the bear’s attack once again with a target of the 78.6% retracement at 0.8527 in mind, being the move up from the 2017 low.
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