EURGBP Rebounds
EUR to GBP fell in yesterday’s trading following the positive labor figures from the UK. EURGBP fell from an intraday high of 0.8534 and closed the day at 0.8490. According to the Office for National Statistics, there were only 14,900 people who claimed for unemployment benefits in December. It was estimated that 33,400 claims would be made. Additionally, average hourly earnings came in higher at 3.2% versus the 3.1% consensus. Meanwhile, unemployment rate came in as expected at 3.8%.
These figures brought a wave of relief to sellers on EUR to GBP. There have been speculations that the BOE may cut rate soon given the disappointing reports from the UK. Yesterday’s labor data somehow eases concerns about the UK economy.
Data from the euro zone also topped forecasts but they were not enough to push EUR to GBP higher. The German ZEW Economic Sentiment report printed much higher at 26.7 versus the 15.2 forecast. Meanwhile, the euro zone version of the report was at 25.6, also higher than the consensus at 16.3.
There are no reports due from the UK or the euro zone today. However, the ECB rate statement is scheduled for tomorrow. Given these, we could see EUR to GBP take its cue from market sentiment today.
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On the 4-hour time frame, we can see that EURGBP found support on the 200 SMA. A reversal candle closing at this level could indicate that there could be buyers in the market. There is a confluence of resistance around 0.8520. First, this price coincides with the 100 SMA. Second, the previous trend line could offer EUR to GBP with resistance (connecting the lows of December 31, January 8, and January 17). Lastly, the 50% Fib level also coincides with the area, drawing the Fibonacci retracement tool from the high of January 20 to the low of January 22.
However, a strong bearish break below today’s low at 0.8780 could mean that sellers will still dominate trading. The next floor is around 0.8450 where EUR to GBP bottomed on December 31.