The EURGBP has seen some considerable volatility on Wednesday as a couple of key releases hit the markets. Can the technicals offer insight into the likely action in the pair as the day matures?
First, let’s take a look at the releases and their impact. The first headliner was the German trade balance figure. Consensus forecast the data as showing a trade surplus of 17.8B, a small in increase on the previous release of 17.3B. The data missed expectations however, with an actual surplus reported at 15.7B. The data sparked a degree of volatility in the EURGBP, but the pair failed to break its overnight consolidation range.
Shortly after, the UK released its own trade balance figure. Consensus had this one a 9.20B deficit, a tightening of the previous figure at deficit 9.46B. The release beat expectations, reported at 9.09B deficit. Initially the release exerted some downside pressure on the EURGBP, but the bulls took control at range support and boosted the pair to intraday highs at 0.8246. These highs offered up in-term resistance, and the EURGBP is now trading around 0.8237.
So what are the levels to watch? To the upside, keep an eye on the aforementioned in-term resistance. A close above intraday highs at 0.8246 would hint at further gains, with previous key support at 0.8253. Beyond that, look to the 200 period moving average and Tuesday support at 0.8262 as a possible upside target.
Looking short, if price can break below intraday lows at 0.8230, prepare for fresh monthly lows in the EURGBP. A close below this level would validate a downside bias, and offer up 0.8222 as an initial downside target.
One thing to keep in mind is the Bank of England interest rate decision scheduled for Thursday. In the absence of any real market movers between now and that release, today’s action may be somewhat muted.
To contact the reporter of this story; Samuel Rae at Samuel@forexminute.com