The cross traded out a near bottom via the formation of a double bottom pattern at 0.8280.
The EUR GBP extended its rally on Wednesday but failed to breach the key resistance like EURUSD. It closed the session at 0.8385 against its previous close of 0.8345. Also, it has been making a higher low pattern, a breakout through 0.8415 needed to advance further towards 0.8470-0.8500 levels—the daily RSI and oscillator hinting a substantial upward momentum in the near term.
The nearest resistance from the current level is at 0.8415, beyond which the resistance comes in between 0.8470-0.8490. On the downside, 0.8270 can act as good support. Until the EURGBP stays above the support, it can be approached with a bullish bias.
The EUR has appreciated overnight despite the pound gaining marginally in the G10 space. This indicates a considerable demand for the common currency.
- The UK unemployment rate was estimated at 3.8%, 0.2 percentage points lower than a year earlier, and 0.1 percentage points lower than the previous quarter. Whereas annual growth in average weekly earnings for employees in Great Britain slowed to 2.9% from 3.2% last month.
- Retail volumes increased by 0.9% in January 2020, recovering from the falls in the previous two months.
- Flash UK Manufacturing PMI registered 51.9 in February, up from 50.0 in January, to signal the strongest improvement in overall business conditions since April 2019. Whereas at 53.3 in February, Flash UK Services PMI dropped from 53.9 in January but remained well above the crucial 50.0 no change value. Moreover, the latest reading was the second-highest since September 2018.
The daily RSI and oscillator remain solid, and as the weekly oscillator has picked up markedly, the risky of a new decline to supports located at 0.8300 and 0.8270 have eased dramatically in the week ahead.
Favor new rebounds to resistances at (R2) 0.8470-0.8490 ahead of the (R3) 0.8590 (mid-January high). A break of the R1 located at 0.8415 would give an impulse move higher, paving the way for a more pronounced rally to the R2 and R3.
Supports stand at 0.8340, at 0.8300 and 0.8270.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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