EUR/GBP consolidates gains, keeps testing 0.7050

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Dec 1, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Córdoba) - EUR/GBP tested 0.7000 during the Asian session but then turned to the upside, following economic reports from the United Kingdom and the Eurozone. Recently it peaked at 0.7051. The pair is testing the key resistance area around 0.7050, that limited the upside last Friday and yesterday.

    If the euro consolidates above 0.7050 it could gain momentum and climb to test 0.7080, where last week highs lie. If it remains below, it could continue to trade sideways between 0.7000 and 0.7050.

    Data ahead of the ECB

    During the European session the pair turned to the upside, after the release of the UK manufacturing PMI, that fell to 52.7 from 55.2 and below the consensus of a53.6 reading. In the Eurozone the PMI matched the preliminary reading at 52.8. Germany reported a decline in the unemployment rate while Italy GDP rose 0.2% during the third quarter as expected. Eurozone unemployment rate declined from 10.8 to 10.7% in October.

    Despite the importance of the economic reports, trader’s attention lie on Thursday's European Central Bank meeting. “While this is the case, it is unlikely that labour market pressures for the Eurozone as a whole are going to become significant in 2016. The natural rate of unemployment is estimated to be around 9.5 percent, so it will likely be a while before significant wage pressures will come from the narrowing of the job market. This means that inflation will not receive much push from wages and unemployment, which supports the expected upcoming decision of further monetary stimulus by the ECB on Thursday”, said Bert Colijn, analyst at ING Bank.
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