Forex Flash: EUR/GBP eyes ECB meeting press conference – RBS

FXstreet.com (Barcelona) - According to Senior FX Trading Strategist Paul Robson at RBS, "We remain concerned that the improvement in financial conditions will not ultimately translate into an improvement in the real economy. So far this has been primarily contained and stabilized (at low levels) in survey indicators, however historical relationships suggest activity should have turned up some months ago."

The positive impact on the EUR from higher EONIA has been a clear focus during recent weeks. However, SONIA rates (UK) have also been rising. As such, there appears little support for the recent EURGBP rally from rate spreads.

The EURGBP is approaching multi-year channel resistance (currently 0.8630). Spot is also at the 61.8% retracement of the July 2011 to July 2012 downtrend. At the same time, the RSI is showing that spot is at the most overbought level since December 2008. In our view, this leaves EURGBP vulnerable to a correction if Draghi sounds more cautious at next week's ECB meeting press conference." Robson adds.