Since the latter week of September, EUR/GBP has been bullish despite the Eurozone economy’s accelerating deterioration and the ECB’s more dovish stanc
Since the latter week of September, EUR/GBP has been bullish despite the Eurozone economy’s accelerating deterioration and the ECB’s more dovish stance. But, a similar scenario is taking place in the UK as well, with the data showing growing economic weakness and the Bank of England returning to the sidelines again. During this period, EUR/GBP has gained more than 100 pips, with the lows getting higher.
Moving averages have been acting as support indicators when the price has retraced lower, keeping the trend bullish on the H4 chart. The 200 SMA (purple) served as support earlier this week when EUR/GBP retraced lower, and it appears that the 20 SMA (gray) has taken over as support currently.
The 200 SMA (purple) held a couple of weeks ago this pair, and we witnessed a notable rebound off this moving average which stood around the 0.8610-20 zone. However, the 100 SMA held firm, and since last Thursday, this pair has been reversing lower. Both economies are not doing well, with October’s manufacturing PMI which will be released tomorrow, expected to show not much change, as this sector is in recession in both economies.
Although the Euro has been feeling a bit better in general, with businesses in the UK have reduced their industrial output since the total demand has been impacted by rising interest rates, problems with the supply chain, and excessive inflation. Additionally, because mortgage rates are rising, businesses have delayed plans to increase their operating capacity. We are already long on this pair since last Friday, and despite the retrace lower today we are remaining long, as the 20 SMA continues to hold.
EUR/GBP did see a brief bounce to new highs around 0.8720s before markets reversed the day’s market flows. Retailer receipts in the UK fell 0.9% in September compared to a 0.4% rise in August, entirely missing the -0.3% estimate. This was the clearest indication yet that UK retail sales missed the target on Friday. SO, we’re holding the EUR/GBP buy signal.
EUR/GBP Live Chart
EUR/GBP
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