EUR/GBP - The Pair to Short-Term Range

Continued GBP strength at multi-decade highs may be enough to force EURGBP declines, with stiff resistance at 0.6780 to halt imminent gains. A failure of this level will eye near-term support at congestion near 0.6740; a break below may see extension towards 0.6708.


[B]Trading Tip[/B] - Continued GBP strength at multi-decade highs may be enough to force EURGBP declines, with stiff resistance at 0.6780 to halt imminent gains. A failure of this level will eye near-term support at congestion near 0.6740; a break below may see extension towards 0.6708. The trader may look to flip and go long the EURGBP on a successful hold of medium-term support at the 50.0 Fibonacci of 0.6536-0.6870 at 0.6703.
[B]Event Risk Europe and the UK[/B]
[B]Europe [/B]- Fundamental reports out of the Euro-zone have been remarkably lackluster as of late, especially after the European Central Bank?s decision to leave rates steady and consistent hawkish - but not overwhelmingly hawkish - bias remained intact. There won?t be much in the way of excitement over the course of this week either as economic events are limited to the typically non-market moving German Factory Orders and Industrial Production reports. A later final revision to domestic GDP numbers has an off-chance of moving markets, but this type of final report seldom surprises well-calculated median forecasts. As such, markets remain primed for range trade through the short term.
[B]UK[/B] - Event risk out of the UK will be relatively thin following the recent rate hike to 5.75 percent, but the release of the trade balance may provide some clues as to the impact of a strong British pound, as the deficit is anticipated to widen further. The manufacturing sector is in the process of recovering, and a sharp slowdown in export demand on the back of a more expensive currency could really limit any further improvements. Regardless, until inflation growth starts to slow substantially, the Bank of England will remain aggressive in their policy stance, which will only support the British pound further. As a result, traders should look to the producer price index readings this week for a gauge of price pressures in the pipeline, as a marked decline or rapid increase could lead to major volatility for the national currency.
[B] Data for July 8 - July 13 Data for July 8 - July 13
Date Euro Economic Data Date UK Economic Data[/B]
Jul 9 German Industrial Production (MAY) Jul 9 PPI Input/Output (JUN)
Jul 12 ECB Monthly Report (JUL) Jul 10 Visible Trade Balance (MAY)
Jul 12 EZ Gross Domestic Product (1Q F) Jul 11 RICS House Price Balance (JUN)