We still keep our neutral bias on EURGBP near-term trend, projecting trading range between 0.8300-0.8730 levels.

We expect the euro cross to decisively break its nine-week range in the coming days. Last week’s Gfk reported that “The general economic situation of the country during the last 12 months has increased by three points this month”.

The outcome of the Bank of England Monetary Policy meeting wasn’t surprising, but Carney said they are too relaxing on interest rates. In discussing inflation, Carney highlighted that “CPI inflation picks up to above the 2% target in two years and is still rising at the end of the three-year forecast period. “.

Moving forward, this week all eyes will be on 1Q GDP figures (Fri).

Data review:

  • UK Consumer Confidence stubbornly marks -13 for the third month in a row, according to Gfk.
  • Manufacturing PMI fell to 53.1 in April, down from March’s 13-month high of 55.1, according to IHS Markit.
  • The MPC voted unanimously to maintain Bank Rate at 0.75% in last week’s policy meeting. The monetary policy response to Brexit, whatever form it takes, will not be automatic and could be in either direction.
  • UK Service sector returns to growth in April, but subdued demand continues, according to IHS Markit. UK Services PMI Index posted 50.4 in April, up from March’s 32-month low of 48.9. Despite a change of direction for service sector activity, the rate of expansion was much softer than on average in 2018.

Data preview:

We have a quiet week for the UK except for 1Q GDP (Fri). We expect the growth number will be printed at 0.5% from 0.2% in Q4.

TECHNICAL OVERVIEW

The near-term outlook remains neutral for the cross which is trading at the lower end of the range 0.8470-0.8725. The daily indicators are mixed, and a break below mid-March low could drag further to 0.8360 level 5th wave.

After the failure against the 0.8680 its 100EA the euro cross retracted back to the 0.8470 levels its mid-March low. The break below 0.8470 affects the daily upside bias and paves the way for a deeper correction to 0.8450 its 200ma (Weekly) and 0.8360 it’s 50MA (monthly).

The resistances are at 0.8560, 0.8600 and 0.8680 levels.

For intraday (Tuesday) a move above 0.8560 could push the price towards 0.8600 handle.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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