EUR/GBP probing resistance with Eurozone PMI figures on tap
Matt Weller, CFA, CMT July 23, 2018 2:38 PM
It’s been a quiet start for traditional economic data, with a slight miss in US existing home sales the only headline of note. That situation is likely to change as we move through the week though, with tomorrow’s European Manufacturing and Services PMI reports providing an up-to-date read on the Eurozone economy. For reference, economists are expecting a 54.7 reading on the Manufacturing PMI report and a 55.0 reading on the Services front, roughly in-line with last months’ readings.
While EUR/USD remains smack dab in the middle of its well-trodden 2.5-month range, EUR/GBP has shown a big more volatility of late and could be the more interesting pair to watch tomorrow morning. Since bottoming near 0.8620 in mid-April, the European cross has formed a broad bullish channel. As of writing, the pair is testing the top of that channel, near the year-to-date high at 0.8970 with additional levels of resistance stretching up to 0.9030:
Source: TradingView, FOREX.com
With rates near two potential sources of resistance, a weak set of PMI reports may prompt EUR/GBP bulls to bank some of their profits from the last week, potentially taking the pair back down toward the middle of the channel near 0.8850 or even the bottom around 0.8800.
Given the strong technical resistance above current rates, even a strong set of reports may not be enough to prompt the pair to break out; instead, EUR/GBP bulls may be crossing their fingers for some negative geopolitical news out of the UK as a possible bullish catalyst. If the pair is able to break conclusively back above 0.9030, an eventual continuation toward the 2017 high near 0.9300 could come into play.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.