Connect with us

Business

The Pound-Euro Week Ahead: Resistance Looms On Charts as Sentiment, Economic Data Set Direction – Pound Sterling Live

The Pound-to-Euro exchange rate has corrected higher in July and coming week will determine if this move is simply a rebound from oversold levels or the beginning of a more protracted turn higher that endures for longer. 

Published

on

post featured image

– GBP/EUR reaches inflection point amid July recovery rally. – As 55-day moving-average at 1.12 guards path back to 1.15.- Investor sentiment, earnings & UK data in GBP’s driving seat.- Time on clock sees Brexit talks fade into background for GBP.
Image © Adobe Images
Achieve up to 3-5% more currency for your money transfers. Beat your bank’s rate by using a specialist FX provider: find out how.
The Pound-to-Euro exchange rate has corrected higher in July although the coming week will determine if this move is simply a rebound from oversold levels or the beginning of a more protracted turn higher that endures for longer. 
Pound Sterling was the second best performing major currency last week after remaining deaf to the Brexit trade talks and preferring instead to take cues from the investors’ glass-half-full view of the global economic outlook, which has enabled it to become an outperformer in early July. 
The Pound has turned higher off its late June lows near 1.09 to be left testing its 55-day moving average just shy of 1.12 on Friday, and whether it overcomes this level in the coming days will help determine the outlook through month-end. 
“EUR/GBPs slip off its .9178 June high has taken it close to the 55 day moving average and the June low at .8924/.8864. This area we expect to underpin. Should this not be the case, the 200 day moving average at .8708 would be back in sight,” says Axel Rudolph, a senior technical analyst at Commerzbank. 
A daily close above the nearby 55-day moving-average this week would open the door for a challenge of the larger and more significant 200-day average near to 1.15, whereas failure to sustain a move above there could be a harbinger of a subsequent return back toward late June lows beneath 1.10 as far as the technical picture goes. Rudolph and the Commerzbank team look for failure at 1.1199 and a drift lower toward 1.05 in the coming months.
Above: Pound-to-Euro rate at daily intervals with S&P 500 (orange) and  21, 55 (red) & 200-day (green) moving-averages. 
“Serious divergences” remained between the two sides in the Brexit trade talks last week but Sterling still closed higher against all major rivals other than Sweden’s Krona in another demonstration of the Pound ‘s newfound desensitisation to developments in the long-running saga. 
“Though a UK/EU-27 FTA covering a range of goods is likely by year-end, the UKs trade policies will be in flux beyond 2020. What 2020 will do is create a starting point for UK/EU-27 trade adjustments going forward; regulatory alignment, dispute arbitration and trade friction are likely to crop up as issues over the medium-term,” says Stephen Gallo, European head of FX strategy at BMO Capital Markets. “We would be inclined to fade GBP strength vs the EUR on a move back to 0.8650

Click here to view the original article.