[ad_1]
Image © Pound Sterling Live
– The British pound has reached the peaks of the range compared to the euro and has retreated
– Probable consolidation
– But, "buying area" potential technique identified on the maps
– main event of the BoE meeting for Pound; retail data for the euro
A deadlock on the Brexit leaves a favorable ground for the pound and the euro to enter a consolidation scheme. However, a study of the technical tables of the GBP / EUR exchange rate shows that parity has fallen back into what could be considered as a "buying zone".
The pound fell 1.3% against the euro last week, suggesting downward pressure on the exchange rate after what had been a good start for 2019. The EU and the US As the UK is at a Brexit stalemate, we see fertile ground for Sterling Pound consolidation and expect only a major directional boost when this stalemate is broken.
Our latest technical studies, however, leave us neutral on the exchange rate, suggesting risks for a longer or shorter extension depending on the chosen period.
These mixed signals mean that the market is likely to need further clarification of the underlying fundamentals before supporting a trend in one direction or the other.
On January 25th, we saw the exchange rate reach the highest of the long-term range, at 1.1600, following a sharp rise. It was still likely that he would face a severe resistance ceiling at the top of the range, which would put downward pressure on the exchange rate.
The upscale are a natural place for short-term technical sellers to enter the market, even temporarily. It's on the back of their sales in a context of additional political uncertainty as the pair has fallen back into the range and lost 1.3%.
The regression of the pair is not terminal, and the upward trend in the short term could be reaffirmed and push the exchange rate up to the top of the range, which would give another chance to cross the cap.
A graphical feature that should give some hope to the Sterling bulls is that parity has returned to what some traders have dubbed the "buyzone", the space between the 10- and 20-day moving averages (MA ) (shaded in yellow on the graph above). ). When declines in this area occur during bullish tendencies, the usual result is that the pair turns around in the buying zone and starts climbing again.
One element needed to hope for such a turnaround would be the formation of a bullish candle inside the buying zone, which is lacking so far. However, if one is formed, more optimistic prospects are likely in the short term. It is quite possible that this will happen during the coming week.
A combination of a bullish bar and a break-close above the 1.1480 peaks on the 4-hour time chart would be the type of signal that would give the "go-ahead" to an additional hike , up to an objective located at the ceiling limit of 1,600 highs.
Yet the four-hour chart also shows bearish indications, which is why we are neutral.
More recently, over the past week, prices have seen a new series of peaks and troughs down. These formed more than two lower lows (LL) and higher lows (LH) since the January 24th peak. This is the first indication that a new downtrend could form. As such, a break and a close below the 1.1360-1.1340 area could be bearish for the exchange rate, leading to further declines up to 1.1280 maybe.
Assuming the UK makes a managed exit from the European Union, most badysts expect the pair to rise in the long run.
From a technical point of view, a successful breakthrough in the 1.1200-1.1600 range, confirmed by a break above the tops of the lineup, would change the deal.
In such a scenario, the pair is expected to initially reach 1.1705, at the monthly Pivot R1, but probably higher, to reach a final target at 1.1960, which is roughly the height of the extrapolated range. at 61.8%. above – the usual technical method for predicting beach breaks.
It's time to move your money? Get 3 to 5% more money from your bank by using the services of RationalFX Foreign Exchange Specialists. A specialized broker can provide you with an exchange rate closer to the real market rate, saving you significant amounts of currency. Learn more here.
* Publicity
The book: what to watch this week
Brexit will be the main target of sterling markets over the coming week. It will probably be a question of whether Prime Minister May can rule out any compromise from the EU regarding Irish support.
Write in the Sunday Telegraph this weekend, May said she would return to Brussels with a "new mandate, new ideas and a renewed determination".
MEPs voted in favor of an "alternative arrangement" guaranteeing that the northern Irish border remains open after Brexit.
Once again, the Irish Deputy Prime Minister said this weekend that there is no credible alternative to the proposal.
There is an apparently unresolved stalemate between the UK and the EU on the issue, and we wonder if this week will provide us with any new information on this.
Unless there is no new information clarifying the stalemate, we expect the book to consolidate.
The main event of the coming week in the calendar is the meeting of the bank of England (BOE) thursday at 12h00 GMT.
This meeting is more important than most, as it will also include the BOE's official quarterly economic forecasts and a press conference with BOE President Mark Carney.
Although no change in interest rates is expected, the forecasts will speak volumes about the Bank's badessment of the state of the economy and could affect the pound sterling. Carney's comments will also be badyzed for guidance on future position.
Data has been mixed recently and if the BOE's valuation is negative, it could weigh on the pound. Similarly, a more resilient outlook would strengthen the pound, which would justify multiple interest rate hikes if Brexit uncertainty is removed.
Given growing fears of global growth and Brexit's growing uncertainty, the consensus seems to be leaning towards a darker and more cautious message from the Bank that would weigh slightly on the pound sterling.
"Policymakers had already taken a more cautious stance at the last meeting in December, as the uncertainty surrounding Brexit was prolonged and given the growing concern over global growth prospects, the bank could go even further and report a lower increase in the rates currently projected. for the next three years, "says FX Broker FX Market Analyst Raffi Boyadjian XM.com.
The other main publication of the pound is the January PMI Construction and Services.
The week begins with the publication of PMI Construction Monday at 9:30 GMT, with a drop estimated at 52.4 against 52.8 previously.
Services are available Tuesday at 9:30 am and should drop to 51.0 from 51.1 the previous month.
A larger-than-expected decline in SMIs may well be a harbinger of a broader economy decline, as SMIs are seen as leading indicators, which could weigh heavily on the Pound . Similarly, a surprise hike suggesting underlying resilience could strengthen the pound sterling.
Euro: What to watch this week
Market sentiment about the outlook for euro area economic growth has deteriorated to the point where investors no longer expect an interest rate. European Central Bank (ECB) in 2019, instead pushing the date of the first rise until 2020. The euro has fallen in line with these expectations. As a result, we believe that expectations are higher than expected: if markets feel that the euro zone has turned a corner, we could see the euro come back.
Although this week's data is second-tiered, it is expected to be of greater interest than usual due to the aforementioned dynamic.
The main publication for the euro will likely be retail sales on Tuesday at 10:00 GMT. Given current market concerns about growth declines in the euro area, the data could be essential for badessing the consumer and spending situation of the euro area, a major component of GDP.
The consensus estimate forecasts a slowdown of -1.6% in December compared to 0.6% previously (in November) and a slower increase of 0.5% per year, against 1.1% previously. Obviously, a result even lower than expected would weigh on the single currency and vice versa, a higher result.
The middle at the end of the week sees the publication of German data.
Concerns about the growth of the largest economy in the eurozone in recent times should lead markets to pay more attention to results than would normally be the case.
Orders from German factories, for example, at 7:00 am GMT on Wednesday, are expected to have rebounded 0.3% in December after a contraction of -1.0% in November. If they fail, it could hurt the euro. If they exceed expectations, they could be stimulated.
Similarly with German industrial production Thursday, which should rebound 0.6% in December after a decline of -1.9% the previous month.
Finally, German trade data are released Friday at 7 am and should show that the surplus will decline from 19.0 billion euros to 18.1 billion euros in December. This could also be closely watched by market players trying to badess the impact of the slowdown in China on the euro area export market.
Recent evidence suggests that the demand for European cars, for example, has declined due to the general economic slowdown in China.
The economic outlook for the eurozone as a whole will also be formally badessed by the ECB on Thursday at 9 am on the occasion of the publication of its latest Economic Bulletin, which should show a number of revisions to the lower expectations of growth and inflation following the recent slowdown in the euro area economic growth.
* Publicity
Source link
