After a test of the 50-Day Moving average at 1.1600, the GBP/EUR pair is again staring at the important 1.14570 support level.
The British Pound finished the week against its European rival at 1.14997 after failing to break above 1.16000 earlier in the week. This now puts the 1.14700 back in the frame.
The Bank of England gave a rather upbeat assessment of the U.K economy earlier in the week, revising GDP higher for 2021 to +7.25%. Despite this, the GBP/EUR couldn’t hold its earlier gains.
Better than expected German Factory orders for March, at +3%, and a 2.7% increase in Eurozone retails sales, were more than enough to offset the Sterling strength.
The immediate fate of the British Pound now lies in the hands of the ongoing Scottish Elections.
Should Nicola Sturgeon’s SNP party gain a majority, the GBP/EUR rate may find itself under pressure on Monday. The Pro-Independence leader yesterday vowed to stage a second Scottish referendum “when the time is right.”
Although some way off its 5th of April high of 1.18036, the Pound has gained 9.21% against the Euro since its March 2020 low of 1.05931. A failure to hold the 1.14700 level could well see the Pound give back some of those gains.
On a close below the horizontal support, the next target would be the 100-Day MA at 1.14412. A break below the 100 Day can push GBP/EUR to the November 12th High of 1.12826.
A close above the 50-Day MA at 1.16000 would target the February 1.18000 high. A break of this level can see the GBP/EUR head higher towards the 1.20740, 2020 high.
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