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EUR/GBP: what will it take to break below the 0.88 handle?

  • EUR/GBP: rallies held up at key MA's on the hourly charts, supported at 0.88 the figure.
  • EUR/GBP awaits Bexit discussions this Thursday.

EUR/GBP has found a temporary base around 0.88 the figure with rallies faded at the 200 SMA on the hourly sticks. Currently, EUR/GBP is trading at 0.8805, down -0.08% on the day, having posted a daily high at 0.8837 and low at 0.8791.

EUR/GBP was pressured from 0.8820 on the back of the weaker than expected German industrial production data (-1.6% in Sep m/m versus -0.9%expected). However, the euro found some stability on a Bloomberg headline and news that further explained that key ECB policymakers opposed language in the latest policy decision which tied asset purchases to progress on inflation and rather wanted to link QE and rates to the evolution of prices.

Analysts at Scotiabank added:

"Dissent among some heavyweight policymakers reaffirms the prognosis that the QE process is nearing completion at this point."

Meanwhile, UK data is thin this week (house prices and IP mainly) and eyes stay o this Thursday's Brexit discussions. Data overnight showed a Halifax house price that was marginally stronger than expected (+0.3% m/m, for a 4.5% rise in the year, taking price appreciation back to the levels seen at the start of the year). 

EUR/GBP levels

Analysts at Commerzbank explained that EUR/GBP is just easing back from the short-term downtrend at 0.8944:

  • "Last week we saw the market chart a strong rebound from major support band, namely the 200-day ma at 0.8762, the September low at 0.8746 and the 55-week ma at 0.8723." 
  • "The move last week was fairly directional and we would allow for further upside probes this week, intraday charts suggest that the market should base circa 0.8810."
  • "Directly overhead lies the 0.8944 short term downtrend, 0.8962 the 55 day ma and the 0.9034 12th October 2017 high, where we suspect that it will struggle. Below 0.8723 would target the 0.8530/78.6% retracement of the move seen this year. Near-term, rallies should find decent resistance at 0.8840/80 (38.2% and 50% retracements of last leg down."

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