EURGBP Rebounds
EURGBP is 0.02% higher at 0.8493 on general GBP weakness across the board and upbeat IFO figures. The Germany December Ifo business climate index came in at 96.3 beating forecasts of 95.5. The IFO – Current Assessment came in at 98.8 also above estimates of 98.1. The IFO – Expectations came in at 93.8, topping estimates of 93 in December.
The UK Consumer Price Index (year over year) came in at 1.5% beating expectations of 1.4% in November. The reading is positive as inflation stabilizes below 2%. The Producer Price Index – Input (MoM) came in at -0.3% below forecasts of 0.1%. The Retail Price Index (MoM) came in at 0.2%, above estimates of 0.1%.
Christine Lagarde in a speech earlier added nothing new to the monetary policy. Former ECB President Mario Draghi said in the same conference that Central banks must be ready to use all tools in their mandate.
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EURGBP is trading close to monthly highs but retreated below the 0.85 mark as of writing. GBP is under selling pressure across the board on renewed Brexit worries. On the technical side the short term momentum is positive, as the pair rebounds from three-year lows. The longer-term picture is cloudy as EURGBP is trading bellow the major daily moving averages.
On the upside, the first barrier for EURGBP stands at 0.8516 the daily high. If EURGBP brakes above that level the next resistance point is at 0.8565 the 50-day moving average. Only a move above the 100-day moving average at 0.8790 can cancel the negative momentum.
On the downside, immediate support stands at 0.8483 the daily low. Yesterday’s low at 0.8351 will provide the next support. Bears need to break below the 0.8257 three year lows in order to start another leg lower.