EURGBP is still moving sideways on its 1-hour forex chart, bouncing off support at the .7260 area and finding resistance at .7360. Price is on its way up to test the top of the range once more while stochastic is moving down from the overbought zone, suggesting that the resistance might hold.
If so, a move back to the range support might be in order. RSI is also on the move down, confirming that buyers are already exhausted and might allow sellers to take over. Meanwhile, the 100 SMA is below the longer-term 200 SMA, which suggests that the path of least resistance is to the downside.
EURGBP Fundamental Factors
There are plenty of event risks lined up from the UK this week, which suggests that volatility might pick up and spur a breakout.
The UK CPI readings came in line with expectations for August, showing a flat headline reading and a fall from 1.2% to 1.0% for the core version of the report. The jobs data is up for release today and a 5.1K decline in claimants is eyed, possibly enough to keep the unemployment rate steady at 5.6%. Meanwhile, the average earnings index could also be of interest since it is slated to climb by a notch for the three-month period ending in July. UK retail sales are due on Thursday.
As for the euro, the downbeat ECB rhetoric is currently weighing on the shared currency. Although Governor Draghi didn’t make any actual changes to monetary policy, he admitted that the weakening inflationary pressures could lead them to ease again if necessary. Sentiment in the region has tanked in September, with the German ZEW and euro zone ZEW figures coming in way below expectations and signaling a sharp drop in optimism.
Final euro zone CPI readings are up for release today with no changes expected to the initial core and headline inflation estimates.
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