- The Euro cross has reaffirmed support since last week.
- The near-term outlook remains favorable.
- An ascending channel has developed in the daily chart.
The outlook remains favorable for the pair, which has already rebounded strongly since testing the support at 50MA, and a small ascending channel has formed in the daily chart.
From here on EURGBP’s trend cast on the recovery path between UK and EA. Besides, the latest developments of Brexit are the other key drivers to the euro cross in the coming days.
In the latest COVID data, in Week 27, the number of deaths registered was 0.5% below the five-year average (43 deaths fewer), this is the third consecutive week that deaths have been below the five-year average; ONS reported.
In the UK, news flows had been relatively upbeat last week. The UK economy started the third quarter on a firm footing as business continued to reopen doors after the COVID-19 lockdown. The surge in business activity in July will fuel expectations that the economy will return to growth in the third quarter after having suffered the sharpest contraction in modern history during the second quarter, the IHS market reported.
- In June 2020, the volume of retail sales increased by 13.9% when compared with May 2020, according to the official report.
- Flash UK Manufacturing PMI Jul: 53.6, 16-month high (Jun final: 50.1).
- Flash UK Services Business Activity Index Jul: 56.6, 60-month high (Jun final: 47.1)
Recovery divergence: In the UK, V-shaped recovery is by no means assured as per IHS Markit, whereas in Germany V-shaped trend is currently emerging for the consumer climate, Gfk said last week. According to the ONS estimate published the other week, the UK’s economy is on course to decline by 20-25% in the second quarter of 2020, led by negative contributions across all major sectors.
Data preview: It is a tranquil week in terms of economic data.
The price can be expected to breach above the resistance at 0.9175 June 2020 high before eyeing the ones at 0.9300. The daily indicators are upbeat suggests higher levels are coming. Under these conditions, keep an eye on the resistance at 0.9175.
As long as the price holds 0.9070, 0.9215 is the level to watch out for. Buy the dip.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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