6 Jun 2013
EUR/GBP keeps below 0.8500 with ECB unchanged
FXstreet.com (London) - There was less certainty on knowing what Mario would have come up with this time around when the ECB met, although sentiment was for the bank to remain steady on policy settings.
The EUR/GBP is keeping below the 0.8500 on the basis of the banks decision to leave rates a 01.5%. The pair has been trading along the 50-days SMA which is a key support line and is necessary for price to maintain the bullish bias. There could be a continuation of the bullish break out of the falling wedge pattern. Technically, Karen Jones at Commerzbank FX Analyst say’s, “EUR/GBP is facing two tough overhead obstacles. One is the top of the cloud at 0.8607 currently and the second is the 0.8637 April peak. Around this level the currency pair is likely to again lose upside momentum, however. Below 0.8590/85 should see a slide back to the 0.8422 mid-May low. Failure will leave the market weighing on the downside and target the 2013 support line at 0 .8372 and the 2012-13 support line at 0.8359. “ She goes onto say, “A close above 0.8637 will cause our medium term forecast to change from neutral to bullish with the .8716 early February high being back on the map.”
Now the market will pay attention the Q&A session. TD Securities said that during the Q&E, Draghi likely does not want to dampen expectations in the market that the ECB stands ready to act, but they see little that he can add other than reiterate what is already on offer. Meanwhile, while 2013 GDP and inflation forecasts should be revised lower, 2014 is likely to be little changed. And in fact, they said, Eurozone data over the last month has been slightly better than expected. This will make it difficult for Draghi to maintain easing expectations at the same level while suggesting even marginally better data. Hence, they expect small moves but risks are for EUR/USD and rates, particularly 1y and 2y forward, to drift higher on the message.
The EUR/GBP is keeping below the 0.8500 on the basis of the banks decision to leave rates a 01.5%. The pair has been trading along the 50-days SMA which is a key support line and is necessary for price to maintain the bullish bias. There could be a continuation of the bullish break out of the falling wedge pattern. Technically, Karen Jones at Commerzbank FX Analyst say’s, “EUR/GBP is facing two tough overhead obstacles. One is the top of the cloud at 0.8607 currently and the second is the 0.8637 April peak. Around this level the currency pair is likely to again lose upside momentum, however. Below 0.8590/85 should see a slide back to the 0.8422 mid-May low. Failure will leave the market weighing on the downside and target the 2013 support line at 0 .8372 and the 2012-13 support line at 0.8359. “ She goes onto say, “A close above 0.8637 will cause our medium term forecast to change from neutral to bullish with the .8716 early February high being back on the map.”
Now the market will pay attention the Q&A session. TD Securities said that during the Q&E, Draghi likely does not want to dampen expectations in the market that the ECB stands ready to act, but they see little that he can add other than reiterate what is already on offer. Meanwhile, while 2013 GDP and inflation forecasts should be revised lower, 2014 is likely to be little changed. And in fact, they said, Eurozone data over the last month has been slightly better than expected. This will make it difficult for Draghi to maintain easing expectations at the same level while suggesting even marginally better data. Hence, they expect small moves but risks are for EUR/USD and rates, particularly 1y and 2y forward, to drift higher on the message.