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Stronger November UK PMI Manufacturing could Push EUR/GBP Breakdown

Stronger November UK PMI Manufacturing could Push EUR/GBP Breakdown

2013-12-02 10:30:00
Christopher Vecchio, CFA, Senior Strategist
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Talking Points:

- UK PMI Manufacturing (NOV): 58.4 versus56.1 expected.

- Improved Chinese PMI Manufacturing buys time for commodity currencies.

- Euro worst performer on the day thus far.

To keep up with the European data and news as the week goes forward, be sure to sign up for my distribution list.

Intraday Price Perspective

Stronger_November_UK_PMI_Manufacturing_could_Push_EURGBP_Breakdown_body_Picture_1.png, Stronger November UK PMI Manufacturing could Push EUR/GBP Breakdown

A scan of this morning’s best and worst performers via the Strong/Weak app shows that the British Pound is having a strong day once again, although its gains have differentiated from last week. Whereas the commodity currencies has suffered versus the Sterling, the worst two performers on the day are the Euro and the Japanese Yen.

Considering that the Yen has been one of the weaker major currencies the past several weeks, the divergence between the British Pound and the Euro is more enticing. Accordingly, with the Euro as the worst performing currency on the H1, H4, and D1 rolling timeframes, it appears that EURGBP may be getting ready to lurch lower:

TECHNICAL ANALYSIS – CHART OF THE DAY

EURGBPDaily Chart: July 2012 to Present

Stronger_November_UK_PMI_Manufacturing_could_Push_EURGBP_Breakdown_body_x0000_i1028.png, Stronger November UK PMI Manufacturing could Push EUR/GBP Breakdown

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With the EURGBP breaking down through £0.8300 today, there may be a bigger push lower developing over the coming weeks.

- Price also threatens to close below 0.8282 (50% retracement from July 2012 low to February 2013 high).

- A close below 0.8282/3000 would confirm the descending channel off of the July and October 2013 highs (with the parallel drawn to the September low).

- The measured move lower in the current channel calls for a 100% extension at .8149.

- It is likely the near-term target lower is also near 0.8157 (61.8% retracement of July 2012/February 2013); we are thus aiming for 0.8145/60 on the downside.

Here’s a look at the data out of Europe this morning that’s influencing price action:

EURO-ZONE ECONOMIC CALENDAR

Stronger_November_UK_PMI_Manufacturing_could_Push_EURGBP_Breakdown_body_x0000_i1029.png, Stronger November UK PMI Manufacturing could Push EUR/GBP Breakdown

UK ECONOMIC CALENDAR

Stronger_November_UK_PMI_Manufacturing_could_Push_EURGBP_Breakdown_body_x0000_i1030.png, Stronger November UK PMI Manufacturing could Push EUR/GBP Breakdown

SWISS ECONOMIC CALENDAR

Stronger_November_UK_PMI_Manufacturing_could_Push_EURGBP_Breakdown_body_x0000_i1031.png, Stronger November UK PMI Manufacturing could Push EUR/GBP Breakdown

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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