EURGBP has recently plummeted to the bottom of its long-term range, following reports that Greece might default on its loans and exit the euro zone. This move has also been buoyed by stronger than expected data from the UK and the prospect of a BOE interest rate hike next year.
However, the range support still seems to be holding and that a bounce is gaining traction. Price could climb back up to the range resistance at the .7400 major psychological level if the EU Summit is able to produce a reform deal for Greece.
Stochastic is pointing up and is almost in the overbought area, hinting that a potential selloff might take place. RSI is on middle ground and barely offering clear clues at the moment. A breakdown from the range would imply further longer-term declines for EURGBP.
EURGBP Fundamental Factors
Much could hinge on the outcome of the Greek debt talks this week, as the bailout package is set to expire by the end of the month. At the same time, the debt payment to the IMF is also due then. Inability to pay its obligations could lead to a Greek exit from the euro zone later on.
Data releases today include the UK’s CBI realized sales index which might show a sharp decline and hint of weaker consumer spending figures later on. Meanwhile, the euro zone will see the German GfK consumer climate index today and another downside surprise is likely, given how the country’s Ifo business sentiment figure fell short of expectations yesterday.
The short-term 100 SMA is above the longer-term 200 SMA for the time being but the moving averages have been crossing back and forth, reflecting range-bound behavior. A convincing downward crossover could be an early signal of a range breakdown, which might lead to at least 300 pips in declines for EURGBP.
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