EUR/GBP Rallies but Resistance Levels will Cap Move
- The Euro-Zone is in rude health with the latest growth figures in-line with already bullish expectations.
- Two resistance levels may prove problematic, although UK political problems may leave the door open for further gains.
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EUR/GBP has been on a roll of late after making a low of 0.87320 on November 1 adding nearly 3% since the start of the month. The pair have been boosted by strong economic data coming out of the single-block while internal UK Brexit squabbles have weighed on the British Pound. And this rally has come despite a 0.25% interest hike in the UK, the first such raise for a decade, and the ECB’s commitment to keep their bond buying program well into 2018, albeit at a reduced rate of EUR 30 billion a month (from EUR 60 billion).
Data released today showed a 0.6% rise in Euro-Zone 3Q GDP, prompting annual growth of 2.5%, compared to 2.3% in the US and 1.6% in the UK. And the latest German ZEW readings also underpinned the positive tone in the single-block, with economic sentiment hitting a six-month in October.
According to ZEW President Professor Achim Wambach, the prospects for the German economy remain “encouragingly positive,” while overall high levels of growth across Europe in the third quarter are supporting further growth in Germany and “boosting expectations for the coming six months.”
Chart: EURGBP Daily Timeframe (June 19 - November 14, 2017)
On the chart above, the pair are closing in on the October 12 high of 0.90340, a level the pair failed to breach when rallying on October 19-20, while the 23.6% Fibonacci retracement level of the April 18 – August 29 move lies just above at 0.90720.
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--- Written by Nick Cawley, Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.