8 Nov 2013
EUR/GBP in tight range after losing 0.84 handle
FXstreet.com (London) - EUR/GBP dropped from 0.8413 to eventually print a low on the day yesterday of 0.8299. With a market focused on the dollar at the end of the week, the pair has stuck to a tight range since climbing back into 0.8340 territory.
The ECB cut rates yesterday which took the market by surprise, however, Kit Jukes, Head of Global Currency Strategy at Societe Generale said, “The ECB sprang an unsurprising surprise! Markets were shocked by the ECB's decision to cut rates despite the fact that the vast majority of analysts and economists, traders and investors, expected a cut in December. So we learn that under Mario Draghi's leadership, the Council doesn't feel the need to wait for a new set of forecasts to get on with the task in hand. Inflation is lower, further from target and rates needed to be cut”. With the aggressive actions of the bank now digested by the markets, the next event which could impact the performance of the pair lies with the BoE. Although the BoE didn’t take any action or release anything new from a statement of any sort yesterday, the currency research team at RBS explained, “Markets will now turn to The UK unemployment rate that takes centre stage in the coming week: the latest data (we forecast a fall to 7.6%) and the November Inflation Report forecast revisions (where we expect the MPC to bring forward, by around two quarters to Q1 2016, the point where the 7% threshold is reached). The BoE will presumably want to guard against any overly 'hawkish' market reaction, so we would expect these revised forecasts to be accompanied by some dovish, cautious rhetoric. CPI inflation is forecast to fall in October, partly on the back of lower petrol prices, but these declines will be short-lived as hefty utility price hikes add up to 0.4pp to CPI inflation in subsequent months”.
EUR/GBP Levels
The 20 DMA is 0.8479, the 50 DMA is 0.8446 and the 200 DMA is 0.8533. RSI (14) reads 47.01. Supports are ascending from 0.8225, 0.8266, 0.8285 and 0.8300. Spot is currently 0.8345 while resistances are 0.8379, 0.8416, 0.8428 and 0.8453.
The ECB cut rates yesterday which took the market by surprise, however, Kit Jukes, Head of Global Currency Strategy at Societe Generale said, “The ECB sprang an unsurprising surprise! Markets were shocked by the ECB's decision to cut rates despite the fact that the vast majority of analysts and economists, traders and investors, expected a cut in December. So we learn that under Mario Draghi's leadership, the Council doesn't feel the need to wait for a new set of forecasts to get on with the task in hand. Inflation is lower, further from target and rates needed to be cut”. With the aggressive actions of the bank now digested by the markets, the next event which could impact the performance of the pair lies with the BoE. Although the BoE didn’t take any action or release anything new from a statement of any sort yesterday, the currency research team at RBS explained, “Markets will now turn to The UK unemployment rate that takes centre stage in the coming week: the latest data (we forecast a fall to 7.6%) and the November Inflation Report forecast revisions (where we expect the MPC to bring forward, by around two quarters to Q1 2016, the point where the 7% threshold is reached). The BoE will presumably want to guard against any overly 'hawkish' market reaction, so we would expect these revised forecasts to be accompanied by some dovish, cautious rhetoric. CPI inflation is forecast to fall in October, partly on the back of lower petrol prices, but these declines will be short-lived as hefty utility price hikes add up to 0.4pp to CPI inflation in subsequent months”.
EUR/GBP Levels
The 20 DMA is 0.8479, the 50 DMA is 0.8446 and the 200 DMA is 0.8533. RSI (14) reads 47.01. Supports are ascending from 0.8225, 0.8266, 0.8285 and 0.8300. Spot is currently 0.8345 while resistances are 0.8379, 0.8416, 0.8428 and 0.8453.