Never miss a story from Dimitri Zabelin

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Dimitri Zabelin

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

BREXIT, EURGBP FORECAST – TALKING POINTS

  • Euro may fall if Eurozone data reinforces ECB rate cut bets
  • Economic data out of Europe has been tending to undershoot
  • EURGBP broke above 2-year high range as Brexit risks spike

See our free guide to learn how to use economic news in your trading strategy!

The Euro may suffer if Eurozone economic confidence data undershoots forecasts and fuels ECB rate cut expectations. Last week, the central bank President Mario Draghi said the outlook is getting “worse and worse”, and the most recent reading of the Eurozone uncertainty gauge certainly reflects his comments. The ECB has entertained the notion of implementing rate cuts and even reintroducing QE.

Economic data out of the Eurozone has been tending to underperform relative to economists expectations with inflation remaining tepid and below policymakers’ goal. Officials at the ECB are hoping that a looser credit paradigm may stimulate economic activity and boost inflation against the backdrop of slower growth regionally and globally.

EURGBP TECHNICAL ANALYSIS

If the data falls in line with the prevailing trend of economic publications out of Europe, EURGBP may experience a pullback. Recent Brexit-related developments have caused the British Pound to fall against most of its major counterparts and subsequently led EURGBP to spike over 1.50 percent, breaking past several major resistance levels.

The pair closed at a 2-year high and experienced the largest single-day jump since November. This occurred right as the pair was beginning to come off its sugar high after closing to the upside for 11 consecutive weeks. A weaker-than-expected reading could cause the pair to cool off temporarily, though this may be offset if the UK-EU divorce outlook worsens and pressures Sterling more than the Euro.

Oscillations in political developments relating to Brexit will likely continue to be reflected in moves in Sterling. As outlined in my EURGBP forecast, this is why performing technical analysis on a pair’s whose reference currency is tied to a fundamental volatile environment is so difficult. Traders will likely wait for the dust to settle – as much as it can in this situation – before adding exposure or exiting their positions.

CHART OF THE DAY: EURGBP CLOSES AT 2-YEAR HIGH

Chart Showing EURGBP

EURO TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter