29 Apr 2015
EUR/GBP: Strong but faces 55 DMA as next challenge
FXStreet (Guatemala) - EUR/GBP is currently trading at 0.7215 with a high of 0.7222 and a low of 0.7136.
EUR/GBP is consolidated after a strong performance in the euro post the results of the US GDP disappointments that arrived well below expectations. Digging deeper in to the data, it might have been expected to be poor, but it was a big miss, well below forecasts and in to negative digits all in all. The data arrived at -0.1% vs 0.4% for Q1 and 0.2% vs 1.1% Annualised.
Analysts at Brown Brothers Harriman explained in detail. " It was a poor quarter across the board. Consumption, which jumped 4.4% in Q4 14, slowed to 1.9%, which was slightly above expectations. Investment fell 2.5%. It is the biggest decline since the end of 2009. It appears that no other sector has managed to pick up the slack created by the investment cuts in the energy sector. Investment in oil and mining collapsed at a nearly 49% annualized pace.
Government spending did not help. State and local governments cut spending by 1.5% at an annualized pace. Spending by the Federal government rose at a 0.3% pace. Net exports were a drag, subtracting 1.25% off GDP, the largest in a year. The trade deficit widened to $522 bln from $470 bln in Q4 14. Price pressures remained modest. The core PCE deflator rose 0.9%, the smallest rise in five years."
EUR/USD made a high of 1.1178 on the back of this and is stabilising just 20 pips or s beneath with intent. Technically, EUR/GBP is through the cloud base at 0.7201 and the downtrend and now the 55 day ma at 0.7243/63 comes at next resistance. However, if the euro begins to fade in to the back ground from here, over time, then this could well cap the cross also and while capped here, Karen Jones, chief analyst at Commerzbank suggested that a negative bias will persist and we could allow for a retest of the 0.7015 March low and 0.7000 psychological support.
EUR/GBP is consolidated after a strong performance in the euro post the results of the US GDP disappointments that arrived well below expectations. Digging deeper in to the data, it might have been expected to be poor, but it was a big miss, well below forecasts and in to negative digits all in all. The data arrived at -0.1% vs 0.4% for Q1 and 0.2% vs 1.1% Annualised.
Analysts at Brown Brothers Harriman explained in detail. " It was a poor quarter across the board. Consumption, which jumped 4.4% in Q4 14, slowed to 1.9%, which was slightly above expectations. Investment fell 2.5%. It is the biggest decline since the end of 2009. It appears that no other sector has managed to pick up the slack created by the investment cuts in the energy sector. Investment in oil and mining collapsed at a nearly 49% annualized pace.
Government spending did not help. State and local governments cut spending by 1.5% at an annualized pace. Spending by the Federal government rose at a 0.3% pace. Net exports were a drag, subtracting 1.25% off GDP, the largest in a year. The trade deficit widened to $522 bln from $470 bln in Q4 14. Price pressures remained modest. The core PCE deflator rose 0.9%, the smallest rise in five years."
EUR/USD made a high of 1.1178 on the back of this and is stabilising just 20 pips or s beneath with intent. Technically, EUR/GBP is through the cloud base at 0.7201 and the downtrend and now the 55 day ma at 0.7243/63 comes at next resistance. However, if the euro begins to fade in to the back ground from here, over time, then this could well cap the cross also and while capped here, Karen Jones, chief analyst at Commerzbank suggested that a negative bias will persist and we could allow for a retest of the 0.7015 March low and 0.7000 psychological support.