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Trading Outlook – EUR/GBP

Jarratt Davis
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Originally updated: 07:00

Trading Bias: SHORT

Currency pair: EUR/GBP

Current Sentiment: Bearish

In today’s trading session we will be focussing on selling opportunities on the EUR/GBP.

Fundamentals:

We’re expecting increased selling opportunities throughout today’s session, all focus turns to UK average earnings data at 09:30am as the BoE have made it quite clear they are not concerned about inflation at this time and are focussing on labour data as a gauge of when to raise rates.
We’ve had a run of positive UK labour data and this is set to continue, figures are expected at 1.7% – if we get that or above expect the GBP to be well supported as the market begins to speculate when a rate hike is coming, with analysts already bring their expectations forward to an early 2016 rate hike.
The EUR has continued its resiliency despite talks breaking down between Greece and the EU, with Prime Ministers Tsipras referring to deal offered by his creditors as blackmail. Watch out for unexpected EUR rallies as the SNB commented yesterday that they still regard the CHF as overvalued which means they will be intervening on the EURCHF over the coming weeks which of course equates to fundamentally unjustified EUR rallies.

Technicals:

We expect this pair to begin selling off during today’s session however the next area of strong resistance is 0.74450 which could provide trading opportunities should the price pull back. Look for the price to bounce off this level if it retraces back to it.

Remember to be aware of intra-day news as this can very often change the sentiment which makes our trade weaker, for this specific trade I will be looking for any positive news regarding Greece which will nullify the opportunities on this trade and turn the sentiment on this pair to bullish. Be mindful of UK Average earnings (09:30amGMT) where figures are expected to be positive, however any negative reading will have a very negative effect on the GBP.

It bears mentioning that the potential for EUR strength across the board should be noted, watch out for rallies on the EURCHF pair (artificially created by the SNB) as this will correlate across EUR pairs.

Other Market Moving News:

In their latest monetary statement the Bank of Japan remain unchanged on existing policy and were optimistic on the Japanese economy and upgraded their assessment of exports and industrial production, this caused the JPY to reverse some of Tuesdays losses.

SNB Chairman Thomas Jordan reiterated that the central bank will intervene in the currency markets if they need to as they believe the CHF is overvalued.

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