Like EURUSD, the euro cross EURGBP has been trading in a well-defined range 0.8720-0.8470. Lack of any meaningful triggers could keep the cross with-in the range further.
We mainly focus on the immediate concern, on European elections on May 23-26 and cross-party talks between Conservatives and Labor.
Westpac Market Outlook reported “In the European Parliament, the current Juncker commission consists of a coalition of the European People’s Party (EPP), an alliance of centre-right national parties with 217 seats; the Socialists & Democrats (S&D), an alliance of centre-left national parties with 186 seats; and the Alliance of Liberals and Democrats for Europe Group, centrists with 68 seats. Together that amounts to 471 seats compared to the opposition’s combined 279”.
In terms of UK politics, Goldman Sachs said: “Technically speaking, there remains some chance of a near-term breakthrough—likely centering on a customs union compromise—that could send Sterling higher.”
In terms of macro data from last week, UK gross domestic product grew by in the three months to March 2019 but contracted in March. Whereas industrial production rose powered by the manufacturing sector,
UK GDP growth was negative 0.1% in March 2019, as the services and construction sectors contracted, according to the official data.
Production output rose by 0.7% between February 2019 and March 2019; the manufacturing sector provided the largest upward contribution, rising by 0.9%, its third consecutive monthly rise, ONS reported.
Looking ahead this week, it’s not a reasonably busy week except March labor market report (Tue).
The euro cross strengthened further last week as protracted buying triggered a break of resistance at 0.8560. However, it has failed to gain a footing above the parallel resistance zone seems to be at 0.8680-0.8720.
The daily indicators still bullish, a break of 0.8680 could open to the higher end of the resistance zone at 0.8720. Support at the 0.8600 its 50MA has held firm in recent days keeping momentum in favor of the upside to 0.8800 if settled above 0.8720.
On the downside, a break below the 200MA (Weekly) 0.8450 may trigger losses towards 0.8360 it’s 50MA (Monthly) and 0.8300.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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