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Forex pairs in this Article » EUR/GBP (London) - EUR/GBP has been caught in the cross fire of the USD which has outperformed so far in 2014.

The Euro has been overall the worst performer before the pound and the cross offers a continued bearish outlook, trading down 0.34% from the high of 0.8319 today. With the pair sub 0.8300 again and printing a low of 0.8278, the daily support levels are being tested once again which opens up speculation for further losses should the less committed bulls give way to the descending trend line that commenced in Aug 2013 from above 0.8700.

BoE 2014

Jane Foley Senior Currency Strategist at Rabobank offered a detailed piece on sterling and gave a bearish insight into the EUR/GBP cross as follows:

“One of the data surprises of 2013 was the ability of the UK unemployment rate to drop to just 7.4%. Since there has been evidence of labour hoarding by UK firms during the downturn, it was commonly expected that the unemployment rate would be slow to recover. Only last summer the BoE provided the guidance that it would start thinking about rate rises when the unemployment rate dropped to 7%. Now it seems likely that, like the Fed, the BoE will alter this guidance to prevent the market prematurely pricing in rate hikes”. She continued and said, “Currently we expect the first BoE rate rise in May 2015. Insofar as the Fed is still continuing with QE, albeit at reducing levels, we expect that cable should remain well supported during Q1 2014. That said, since a lot of good news is already priced into the pound we don’t expect sharp gains and would favour a strategy of buying dips. While the EUR is currently very well supported we anticipate that the improvement in UK fundamentals could push EUR/GBP slowly towards the 0.81 area by the end of this year”.

EUR/GBP Levels:

The 20 DMA is 0.8370, the 50 DMA is 0.8384 and the 200 DMA is 0.8483. RSI (14) 36.49. Supports are 0.8205, 0.8225, 0.8253. Spot is 0.8278 while resistances are 0.8304, 0.8320, 0.8330, 0.8350 and 0.8372.
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