[B]Trading Tip - [/B][B]The EURGBP has remained remarkably stable despite an overwhelming flight to safety across financial asset classes, leaving scope for continued range trade. Combined with limited event risk, we see little reason for the pair to break out of its current 70 point range. A short at solid resistance provides attractive profit opportunities, with a failure to eye a return to support through the short term. A fairly tight stop will keep losses small?a wise move given recent volatility across other EUR crosses. [/B]
Event Risk Euro Zone and UK[/B][B][/B]
Euro Zone -[/B] Given continued market jitters, it is entirely plausible that a large surprise in the upcoming German ZEW survey will force modest moves in EUR crosses. Yet past data releases have shown that markets are slow to react to the middle-tier economic data. Later Euro Zone Current Account and Industrial New Orders figures have an outside chance to move pairs, but it is rare for EZ data to move significantly beyond consensus forecasts. Instead markets will focus on German GDP reports due August 23rd. Though it is highly unlikely that there are any significant revisions to previous releases, range traders should nonetheless be wary of the release date.
[B]UK[/B][B] -[/B] The UK calendar will be remarkably light through the coming week of trade, with exclusively second-tier reports unlikely to force major moves in GBP crosses. Early-week trade will only see Rightmove House Prices report as well as a non-market-moving Money Supply release. Barring a truly shocking result out of such data, we are likely to see calmer trade in the EURGBP. Otherwise, markets look forward to the somewhat important CBI Industrial Trends report. We have seen the CBI survey elicit moderate reactions from forex markets and will watch the GBP appropriately. Finally, Friday?s UK GDP revisions are unlikely to cause a stir across Pound pairs. Given that revisions in UK data are rare, the release of the individual components that comprise GDP are unlikely to force shifts in GBP sentiment.