British Pound (GBP) Price Outlook: Is EUR/GBP Ready to Break the Range?
EUR/GBP, GBP/JPY Analysis and News
Yesterday saw the Pound posted its worst performance against the USD in over a year and the Euro since April. I will save the column inches and point you to my recent post, discussing the concerns I had over the currency and why it was in a precarious situation.
However, now that we have seen a sizeable drop in the currency, adding to GBP shorts at current levels on a short-term basis is a lot less appealing. Don’t forget that we are nearing the end of month rebalancing which had likely exacerbated the move lower in GBP and quite possibly, post-month-end moves might see a modest reversal. The table below shows momentum in GBP is very bearish, with a Z-score of over 2 against the currency vs USD and EUR, this is another factor that warns against chasing GBP lower.
Source: Refinitiv, DailyFX
Going forward, I suspect Pound will be much more reactive to domestic economic data than previously has been the case in recent months given how aggressive BoE tightening has been priced into UK rates. Therefore, UK data now have a higher propensity to move the needle regarding expectations over monetary policy.
EUR/GBP | Time for a Range Break?
EUR/GBP is getting interesting again now that it is trading at multi-month highs. Although, a big level in the form of the 200DMA (0.8646) stands in its way, alongside the July high (0.8669). For now, my bias would be to fade the move and reassess should the cross close above the July peak, which would likely open the doors to 0.8720.
EUR/GBP Chart: Daily Time Frame
GBP/JPY | Eyes on Key Support Once Again
With GBP/JPY also approaching its 200DMA, the cross will be important to keep a close eye on as to whether the Pound can muster any rebound. All the while, Cable is testing the 1.3500.
GBP/JPY Chart: Daily Time Frame
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