EUR/GBP – Euro at Risk of Further Declines Vs British Pound28 September, 2017 by Aayush Jindal in Market Analysis
- The Euro started a downside move from the 0.9280 swing high and now trading below 0.8800 against the British Pound.
- There is a key bearish trend line forming with resistance at 0.8780 on the 4-hours chart of EUR/GBP.
- Germany’s GfK Consumer Confidence in Oct 2017 is forecasted to decline from 10.9 to 10.8.
- The US Gross Domestic Product report will be released for Q2 2017, and the GDP is forecasted to rise 3% (Annualized).
EURGBP Technical Analysis
The Euro started a major downside move from the 0.9280-90 levels against the British Pound. The EUR/GBP pair is already down more than 400 pips and looks set to break 0.8740.
The 4-hours chart of EUR/GBP clearly points a downtrend from well above 0.9250. The pair broke many support levels recently, including 0.9000, 0.8900 and 0.8850. There was even a close below 0.8800 and the 100 simple moving average (H4).
The pair recently traded as low as 0.8746 and is currently correcting higher. On the upside, there is a key bearish trend line forming with resistance at 0.8780 on the 4-hours chart.
An initial resistance is around the 23.6% Fib retracement level of the last decline from the 0.8885 high to 0.8746 low. As long as the pair is below 0.8800, it might decline further. Alternatively, a close above 0.8800 could push the pair towards 0.8850-60.
Germany’s GfK Consumer Confidence
Today in the Euro Zone, the German GfK Consumer Confidence for Oct 2017 was released. The forecast was slated for a minor rise from the last reading of 10.9 to 11.0.
The actual result was below the forecast, as there was a decline from 10.9 to 10.8. According to the report, both income expectations and propensity to buy decreased in September and thus GfK forecasts a decline in the consumer climate index from 10.9 to 10.8.
The report added that:
After the setback of the preceding month, income expectations in September stabilized and increased moderately. With an increase of 3 points, the indicator compensates for part of the decrease from August. It currently stands at 33.4 points. The indicator’s clear increase of 26.6 points in comparison with the preceding year can also be viewed as a clear indicator for the continuing positive economic sentiment.
The result is slightly negative and brings no hope for EUR/GBP, and that’s why any major recoveries remain capped near 0.8780-0.8800.
Economic Releases to Watch Today
- US Initial Jobless Claims – Forecast 270K, versus 259K previous.
- US Core Personal Consumption Expenditure for Q2 2017 (QoQ) – Forecast +0.9%, versus +0.9% previous.
- US Wholesale Inventories for August 2017 (preliminary) – Forecast +0.4%, versus +0.6% previous.
- US Gross Domestic Product Q2 2017 (Annualized) – Forecast 3% versus previous 3%.