EUR/GBP: rally consolidates above key technical levels, more to go?
- EUR/GBP rally stalling, where next?
- EUR/GBP fragile?
EUR/GBP's rally has stalled although the technical picture has turned highly bullish with 4hr RSI on the brink of overbought territory with price above key moving averages the same time frame. Currently, EUR/GBP is trading at 0.8855, up 0.35% on the day, having posted a daily high at 0.8874 and low at 0.8810.
Sterling under pressure on busy week ahead
On a busy week ahead for UK markets, ( BoE meeting, trade, IP and construction output data), sterling is under pressure at the start of the week with UK data disappointing and concerns over UK PM MAy's leadership. The UK services and composite PMI data were dropping to 53.0 and 53.5 versus consensus calls for 54.1 and 54.6 respectively. "PM May’s ongoing battle to corral the Conservative party behind her Brexit policies are adding to GBP headwinds, we think, with her premiership increasingly looking as if it is on borrowed time," argued analysts at Scotiabank.
In terms of EZ data, the PMI's have been positive; "Italian data were broadly better than expected while French services and composite data were both marked down a tenth relative to preliminary reports. German data were revised higher, however, allowing the Eurozone data to be revised up; final services (58.0) and composite (58.8) readings reached a new cycle highs," noted the analysts at Scotiabank.
EUR/GBP levels
EUR/GBP broke up through the previous resistance of 0.8833/55, made up of the 55 and 200-day moving averages and the .8864 5 month resistance line. RSI on the 4hr chart is higher and on the verge of breaking into overbought territory while momentum has maxed out poting to a phase of consolidation. Failures to hold above 0.8864 on a daily closing basis leaves risk to the downside still with a target of 0.8687/89 recent lows. (The December and January lows are located at 0.8689/87 while the June low is at 0.8651). 0.8936 January highs and the .9034 October 2017 highs are the near-term upside targets.