We have been long GBP versus EUR since early January, as we traced out the double top pattern which would support a short EUR/GBP trade. Today in early Asia thin trade, the cross just fell 0.50% as we are writing.
Wallstreet cn reported “UK PM May and European Commission Chairman Juncker jointly announced. Juncker issued a letter on the details of the Brexit Amendment Agreement, stating that the UK must leave the EU no later than May 23, otherwise, elections will be held.”
The pound reacted positively and currently trading with 0.40% gains across the board in early Asia today.
The latest services PMI signaled only a marginal increase, leaving the index on track for its weakest quarter since Q4 2012, according to IHS Markit. February Service PMI registered at 51.3 up from 50.0 in January.
On the economic data front, we will see January UK GDP today. GDP fell by 0.4% in December 2018. Now we expect the economy recouped by 0.1%-0.2% from December 2018.
The euro cross continues to retrace, with breaking the 38.2% fib reaction and psychological support 0.8500 marks. EURGBP briefly backtracked 0.8500 this morning, low 0.8475 but on an RSI divergence. There is a Brexit vote story going on which develops some sharp GBP moves. It will be interesting to see if we close below 0.8520-0.8500 zone by today.
We continue to favor being short EURGBP on rallies, waiting for 0.8400 and 0.8300 levels. The new profiles show that the trend remains lower for longer. Looking at the most recent set of trading pattern, 0.8400 its 200MA and 0.8350 its 100.0fe are the next destinations in the near term.
The resistance stands at 0.8560 and 0.8650/0.8675.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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