Yesterday was an interesting one for EURGBP, as further very negative EU news saw the pair unable to hold new lows – the divergence suggests the Euro sell-off may be exhausting itself in places.
For further signs that this is the case, look for today’s flash PMI data out of Europe beginning at 0730 GMT and the reaction to it. The UK calendar is light today, with only the Jun. report for BBA loan for house purchase set for release.
Chart: EURGBP
Yesterday saw an engulfing bullish candlestick reversal after a long sell-off despite very powerfully negative Euro news. This and a look at the GBPUSD chart over the last couple of days suggest that sterling may be losing some of its safe haven shine and may suggest that overall Euro negativity will have a hard time maintaining any further momentum. This could mean a squeeze of varying sizes depending on the cross. The key resistance level for the EURGBP pair comes in at the pair’s previous cycle low at 0.7950. It’s too early to call a trend change, just looking at a higher risk for some consolidation of the trend in the near term.
John J Hardy,
SAXO BANK