EUR turns bearish ahead of European data
The EUR is trading under pressure against its major peers this morning ahead to today’s session. The highlight of the day comes in the form of the latest German CPI inflation data for this month. Analysts are anticipating a drop in CPI data to 1.9% from October’s 2.0% reading. If the German inflation data fails to show a dip in the persistent rate of domestic price rises, then the euro may enjoy further support.
Confirmation that the UK economy expanded by 1% over the summer has bumped up the pound against the euro. The surge in sterling to around 81p came as decent third quarter growth in the UK appeared to trump last night’s eurozone-IMF debt deal to prevent Greece going bust and keep it in the euro. The pound is also likely to have benefited from Mark Carney’s surprise appointment yesterday as the next Governor of the Bank of England. The well-respected Canadian central banker is seen as more hawkish on interest rates and less likely to ease monetary policy further, which will be supportive for the pound in the future.
In the FX market, GBP/USD recovered from losses made earlier in the session to settle higher after the GDP report came in line with expected median estimate, while safe-haven related flows stemming from the uncertainty surrounding the latest Greek proposal also supported Sterling related flows. Weakness in the morning was a product of not only risk averse trade flows relating to the uncertainty surrounding the proposed Greek debt buyback, but also cautious comments from PIMCO’s Amey, who said that there is a good chance UK will lose AAA rating. In terms of technical levels, supports are seen at the 10DMA line at 1.5942, followed by the 200DMA line at 1.5858. On the other hand, resistance levels are seen at the 55DMA line at 1.6063 and then at the 21DMA upper Bollinger level at 1.6138.
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