25 May 2015
EUR/GBP: Bearish on a Grexit to a stronger greenback
FXStreet (Guatemala) - EUR/GBP is currently trading at 0.7099 with a high of 0.7118 and a low of 0.7073.
EUR/GBP has been chipping away at the downside through 0.7120 support and in to danger territory for the bulls below the psychological 0.71 handle with March lows 0.7015 in sight. Embarking on this territory would be a test of the 8-year channel that commenced in Jan 2003 until Nov 2007, potentially offering a tough area of support between 0.7000 and 0.6500 on continued supply and downside price action.
Fundamentally, the theme is in place for a lower euro from the domestic economic and political issues in the EZ, with the ECB's QE programme coupled with the uncertainty around a Grexit, to the bullish sentiment around the US weighing on the single currency through the psychological 1.10 level vs the US dollar.
For the cross, EUR/GBP, the pound is trading in bouts of domestically originated strength at times, from politics, albeit with the bullishness settled on the Conservative party's victory, to positive economic data such as the recent retails sales on the back of lower oil and shop prices that took sterling to greater heights and along with ECB member Benoît Cœuré's recent comments on front loading QE which propelled the cross lower.
Technically, Karen Jones, chief analyst at Commerzbank explained that EUR/GBP has finally taken out support offered by the 0.7123/18 April low and the close below here confirms that the next leg lower is underway. "The market will remain directly offered while rallies remain below the 0.7170 accelerated downtrend and will make no impact on the chart while below the 0.7282 15th March high. Target is the 0.7015 March low."
EUR/GBP has been chipping away at the downside through 0.7120 support and in to danger territory for the bulls below the psychological 0.71 handle with March lows 0.7015 in sight. Embarking on this territory would be a test of the 8-year channel that commenced in Jan 2003 until Nov 2007, potentially offering a tough area of support between 0.7000 and 0.6500 on continued supply and downside price action.
Fundamentally, the theme is in place for a lower euro from the domestic economic and political issues in the EZ, with the ECB's QE programme coupled with the uncertainty around a Grexit, to the bullish sentiment around the US weighing on the single currency through the psychological 1.10 level vs the US dollar.
For the cross, EUR/GBP, the pound is trading in bouts of domestically originated strength at times, from politics, albeit with the bullishness settled on the Conservative party's victory, to positive economic data such as the recent retails sales on the back of lower oil and shop prices that took sterling to greater heights and along with ECB member Benoît Cœuré's recent comments on front loading QE which propelled the cross lower.
Technically, Karen Jones, chief analyst at Commerzbank explained that EUR/GBP has finally taken out support offered by the 0.7123/18 April low and the close below here confirms that the next leg lower is underway. "The market will remain directly offered while rallies remain below the 0.7170 accelerated downtrend and will make no impact on the chart while below the 0.7282 15th March high. Target is the 0.7015 March low."