The euro cross may hover around 0.8500 with the likelihood of further weakness.
EURGBP is likely to remain lower for the fourth straight month, and we continue to favor being cautiously optimistic. The 0.8470 level is in focus for me. Any break and closed below would have me looking at the 0.8300 levels.
It was down for four months in a row. The run last extended to five months between December 2014 to March 2015.
The euro cross has plunged about 8.5 percent year to date but would still need to fall another 0.50 percent to erase all the 2019 gains. With the market entering the last week of November, the price may find support towards the 50MA (Monthly) and March 2019 low of 0.8470.
Financial markets have revised their probability of a no-deal Brexit, and focus has shifted to the UK General election.
The election is decisive for what will happen ahead of the new Brexit deadline 31 January, Danske Bank cited. In a note, the bank also cited, “Conservatives are back to ‘normal’ level in polls.” The Conservative Party has moved above 40% in the polls and is now back at its ‘normal’ level from 2018. It is now more than 10pp ahead of Labour that is polling around 30%.
Data review: The Longest stretch of weak numbers for a decade
November Flash UK Manufacturing PMI printed at 48.3, two-month low vs. Oct final 49.6.
At 48.6 in November, down from 50.0 in October, the IHS Markit Business Activity Index fell back below the 50.0 no-change level and signaled a modest reduction in service sector output. The latest reading was the lowest since July 2016, according to the official report.
This week’s economic calendar is empty.
We are watching how price action develops around 0.8500-0.8470. Break lower opens the potential for 0.8370-0.8300. Consider buying if reached. The 0.8470 level is in focus for me. Any break and closed below would have me looking at the 0.8300 levels. The area includes the March 2019 low and an ABC target. So, all in a fairly thick congestion area.
On the downside getting, 0.8370-0.8300 would provide an opportunity to consider bullish exposure from better levels.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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