- EUR/GBP has continued to climb as the euro pops towards key techncial resistance vs the greenback and sterling stalls at prior swing lows.
- EUR/GBP is currently trading at 0.8782 at a high of 0.8790 from a low of 0.8760.
EUR/GBP maintains its northerly trajectory from late January double bottom lows. The euro is picking up a profit and techncial taking bid which is supporting the upside in the cross as the greenback bleeds out below the 97 handle, snapping nine days of consecutive gains.
There is a lack of solid drivers and sentiment remains bearish over Europeans economies, voiced earlier by a number of key ECB members today. Bundesbank President Jens Weidmann said that the weakness in the economy had been a ‘ bit more protracted’ than initially thought. Ewald Nowotny, the Governor of the central bank of Austria, signalled that the ECB would re-consider its outlook for policy rates ‘in the summer’.
Brexit runs down to the eleventh hour
On the Brexit front, its much of the same back and forth between UK Parliament, Brussels and Ireland for PM May as the negotiations and clock runs down to the eleventh hour. “The talks are at a crucial stage. We now all need to hold our nerve to get the changes this House has required and deliver Brexit on time,” May said in a statement to Parliament today.
However, economic fundamentals have kicked in as well. Data wise, UK Q4 GDP, declined 0.2%, down from +0.6% in the Q3 and for 2018, GDP growth had slipped to its lowest since 2012, at 1.4%, slowing from 1.8% in 2017. But its not just in the UK where alarm bells are ringing. Italian growth forecasts have been reduced from 1.2% to a paltry 0.2% and are a spanner in the works for the EZ project that remains under scrutiny and problematic for the ECB trying to steer so many economies requiring different levels of monetary policy and debt management.
EUR/GBP levels
Analysts at Commerzbank explained that EUR/GBP is consolidating around the 38.2% retracement:
“Currently, the market remains in upside corrective mode and we are unable to rule out gains to 0.8840/90 where we look for signs of failure. We have minor support at 0.8723 and this guards the 0.8620/18 lows. Only failure at 0.8620/18 would suggest ongoing weakness to the base of the channel at 0.8545 and potentially the 200 week ma at 0.8357. The market stays directly offered below the 200 day ma at 0.8863, and only above here allows for a move to the 55 day ma at .8892 and this, together with the October 0.8941 high, are expected to contain the topside.”
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