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EUR/GBP Forecast - Rebound May Prove Fleeting if Resistance Stands Firm

EUR/GBP Forecast - Rebound May Prove Fleeting if Resistance Stands Firm

2019-11-22 12:00:00
Nick Cawley, Strategist
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UK and Euro-Zone PMIs and EUR/GBP Price Analyis and Chart

  • New UK PMI data highlights the weakness in the economy.
  • EUR/GBP rally may be short-lived.

Brand New Q4 2019 GBP and EUR Forecast and Top Trading Opportunities

A tale of two weak currencies continues with recent data releases showing both their economies struggling. The recent PMI releases show the UK’s struggle with Brexit uncertainty continuing to hit home – with all three new flash UK PMIs below 50 – while Eurozone manufacturing picked up from lowly levels, but services fell more than expected.

EUR/GBP Forecast - Rebound May Prove Fleeting if Resistance Stands Firm

EUR/GBP Price Analysis and Chart

The net outcome from today’s releases has seen EURGBP push marginally higher after its multi-month decline but the move does not look convincing yet. The pair are currently trading around the 20-day moving average, an indicator that has capped upside movement for the last six weeks, while the 50- and 200-dmas are currently at 0.86935 and 0.88410, substantially higher than the current spot price. The CCI indicator has moved out of oversold territory and is just off a six-week high.

Any pull-back in EUR/GBP will initially target Monday’s multi-month low at 0.85220 ahead of May’s low at 0.84907 and the late-March low print at 0.84725. Below here, the April 2018 low at 0.83133 beckons.

EUR/GBP Daily Price Chart (January - November 22, 2019)

EUR/GBP Forecast - Rebound May Prove Fleeting if Resistance Stands Firm

IG Client Sentiment shows that traders are 65% net-long EUR/GBP, giving us a bearish contrarian bias.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on the Euro and Sterling – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at nicholas.cawley@ig.comor via Twitter @nickcawley1.

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

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