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EUR/GBP stuck between key MAs, eyes EZ data & yield spread

  • EUR/GBP stuck between 100-day MA and 200-day MA.
  • Focus on Eurozone Sentix confidence, PMIs & PPI data.
  • 10Y UK-German yield spread awaits breakout.

EUR/GBP looks stuck in the range defined by the 100-day MA level of 0.8943 and 200-day MA level of 0.8762 levels.

As of writing, the currency pair is trading at 0.8880 levels. BOE's dovish hike last Thursday yielded a big move higher to 0.8939 levels, however, the follow through stalled on Friday.

Focus on  EZ data

Analysts at Nomura expect German factory orders to have increased 0.4% m-o-m in September, following a 3.6% m-o-m rise in August. Meanwhile, November Sentix investor confidence is expected to remain positive at 31.0 from 29.7 in Oct.

Better-than-expected data could strengthen the bid tone around the common currency. The final EZ and German PMI readings could go unnoticed, unless there is significant upward/downward revision to preliminary numbers.

Yield spread range bound

The chart above shows the UK-German 10-year yield spread has been restricted to a narrow range of 0.87 basis points (bps) to 0.98 bps. A range breakout could yield bid moves in the EUR/GBP cross.

EUR/GBP Technical Levels

Key resistance levels are - 0.8935 (50-day MA), 0.8943 (100-day MA + trend line sloping lower from the Sep. 29 high and Oct. 20 high). A convincing break above the same would open up upside towards 0.9022 (Oct. 20 high).

On the other hand, a breakdown of support at 0.8844 (5-day MA) could yield a sell-off to 0.8762 (100-day MA). A daily close below the same would expose 0.87 (zero levels).

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