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EURGBP At Weekly Lows After Weak IFO Survey

EURGBP
EURGBP

EURGBP extends losses for the second day after the Germany IFO surveys came below the expectations. The preliminary PMI’s from the eurozone yesterday also came below the expectations except for the manufacturing PMI.

Germany IFO Below Expectations

Germany IFO Business Climate survey came in at 93.4 in September, below the forecasts of 93.8. The Germany IFO Current Assessment registered at 89.2 also below the expectations of 89.5. The IFO Expectations reported at 97.7 well below the estimates of 98. The IFO institute said that uncertainty over the Brexit negotiations and US election has not yet had any impact on the German business climate but the higher coronavirus infection rates hurting service sector and especially entertainment and tourism businesses as shown by the service PMI. 

EURGBP Reaction to IFO 

EURGBP gave up over 40 pips after the disappointing IFO Surveys, but as of writing it pared some of the loses and now is trading 0.43% lower at 0.9122.  

In the UK investors await the Rishi Sunak’s announcements about the new relief package and the extension of the furlough scheme. Meanwhile, the UK CBI Distributive Trades Survey for September smash expectations as it came in at 11%, analysts expecting a -10%. 

The S&P Global rating agency downgraded its UK 2020 GDP forecast to -9.7% from -8.1% in the previous forecast. The agency now estimates that the UK economy would grow by 7.9% in 2021 above the June projection of 6.5%. 

EURGBP Price Daily Technical Analysis 

EURGBP keeps the positive momentum despite the two days correction. Minor support for the pair today stands at 0.9113 the daily low. If the pair settles below today, then the next support is at 0.9086 the low from September 17. A move below the 50-day SMA at 0.9051 would cancel the bullish momentum and will open the way for further correction.

On the flip side, resistance for EURGBP stands at 0.9180 the daily top. If the pair breaks that level, then the next resistance would be met at 0.9216 the high from yesterday. More selling pressure would emerge at 0.9259 the top from September 15. 

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EURGBP Daily Chart