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Forex: EUR/GBP rebounds after UK data

FXstreet.com (Barcelona) - Market pressure against the Euro sent the EUR/GBP to a test of the psychological level at 0.8500 during the London opening and as the German IFO survey revealed one more reason for the ECB to intervene with a rate cut after yesterday’s weak PMI data. Then, the cross bounced and found 0.8530 (yesterday’s close at 0.8534) as the British Pound is being sold after UK CBI disappointment.

Market consensus was expecting better weather in April to help the CBI realized trades to outperform yesterday’s industrial survey, rebounding after 4 declining months in a row, but the figure fell to -1 instead of rising from 0 to 7. Earlier, UK MBA Mortgage Approvals rose from 30.5K to 31.2K, as expected in March.

The German IFO survey came in lower than expected for the April report: drop from 106.7 to 104.4 in business climate (consensus of 106.2), fall from 109.9 to 107.2 in current assessment (consensus of 109.5) and drop from 103.6 to 101.6 in expectations (consensus of 103.0). “So with France looking a touch better but still very weak into April, and German surveys heading lower again, we think that will be enough to get the ECB debating the potential for up to 50bps of cuts, but actually delivering a 25bps cut to the refi rate in May and leave the debate for further action until June”, wrote TD Securities analyst Jacqui Douglas.

MIG Bank analysts see that key resistance at 0.8602 is still capping the upside potential: “The EUR/GBP has thus far failed to break the resistance area between 0.8602 and 0.8659. Hourly supports are at 0.8504 (19/04/2013 low) and 0.8490 (12/04/2013 low), wrote analysts Bijoy Kar and Luc Luyet.

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