4 Jun 2015
EUR/GBP: Bulls attempting a break out
FXStreet (Guatemala) - EUR/GBP is currently trading at 0.7335 with a high of 0.7386 and a low of 0.7318.
The euro is dropping back from extraordinary bullishness that took the major on to the 1.13 handle and right up to test 1.1380, albeit falling shy of May's highs of 1.1466. Besides the ebbs and flows of news around Greece, for the cross, the fundamental demand also comes in Sterling's weakness, notably with a slight delay in the cross's price action to events through the pound and EUR/USD. Moreover, markets are concerned about ongoing austerity in the UK as a head wind to UK growth.
However, on the otherside of the fence, there are bears around the EZ and risks involved when bond yields peak and turn back around, which are currently supporting the euro, and given Draghi's commitment to the QE, a rate hike might start to be priced in again from the UK at some later stage this year while the ECB are still a million miles apart. However, as Jane Foley, Senior Currency Strategist at Rabobank explained, "Following the recent disappointments with key UK economic releases, the money market is not fully priced for a policy move until July 2016".
Technically, EUR/GBP bulls remain in control still. The cross is trying to take on the March high and 6 month resistance line and 78.6% retracement at 0.7385. This zone is regarded by Karen Jones, chief analyst at Commerzbank, as the last defence for the 0.7482 May peak. "We will neutralise our outlook for now as the move feels somewhat directional," she said, "Above 0.7391 will target the 0.7482 May high and introduce potential to the 0.7685/94, the 38.2% retracement of the move down from 2013 and the 55 week ma."
The euro is dropping back from extraordinary bullishness that took the major on to the 1.13 handle and right up to test 1.1380, albeit falling shy of May's highs of 1.1466. Besides the ebbs and flows of news around Greece, for the cross, the fundamental demand also comes in Sterling's weakness, notably with a slight delay in the cross's price action to events through the pound and EUR/USD. Moreover, markets are concerned about ongoing austerity in the UK as a head wind to UK growth.
However, on the otherside of the fence, there are bears around the EZ and risks involved when bond yields peak and turn back around, which are currently supporting the euro, and given Draghi's commitment to the QE, a rate hike might start to be priced in again from the UK at some later stage this year while the ECB are still a million miles apart. However, as Jane Foley, Senior Currency Strategist at Rabobank explained, "Following the recent disappointments with key UK economic releases, the money market is not fully priced for a policy move until July 2016".
Technically, EUR/GBP bulls remain in control still. The cross is trying to take on the March high and 6 month resistance line and 78.6% retracement at 0.7385. This zone is regarded by Karen Jones, chief analyst at Commerzbank, as the last defence for the 0.7482 May peak. "We will neutralise our outlook for now as the move feels somewhat directional," she said, "Above 0.7391 will target the 0.7482 May high and introduce potential to the 0.7685/94, the 38.2% retracement of the move down from 2013 and the 55 week ma."