[ad_1]
Image © European Central Bank
– GBP / EUR to continue on the side, risk of lower break
– The long-term floor at 1.1000 is still waiting
– The pound must be motivated by GDP policy and publication
– Euro eyes minutes from the ECB
The pound is trading at around 1.118 euros at the start of the new week, after recoding its ninth consecutive week of decline the previous week. Studies charts suggest that parity will likely go awry over the next few days, but because of the dominant negative trend, readers will not be surprised to learn that risks remain skewed downward.
The 4-hour chart – used to badyze the short-term trend, ie the trend over the next 5 days or week – shows that the GBP / EUR exchange rate has entered a lateral trend after a previous decline.
This lateral trend is expected to continue.
Given the overall downtrend in daily and weekly charts, there is a risk of a break-up of the lower range to the bearish target at 1.1050. A break below 1.1115 would confirm a further decline.
Although this seems less likely, a break above 1.1210 would cancel the bearish theme and confirm a move towards a goal of 1.1250.
The daily chart – used to indicate medium-term outlooks that include next week to next month – shows the pair in a long-term downtrend that should stop and diverge a bit before returning to a target eventual to 1.1000.
The 1.1000 target is at the bottom of a long-term range.
The weekly chart shows the pair in an uninterrupted 9-week downtrend on a longer-term side beach.
In the long run, the pair is expected to land at a minimum of 1.1000 before rebounding and continuing to expand within the range.
A rebound on the ground would probably lead to a movement up to 1.1200 – or more, depending on the speed of recovery.
We use the weekly chart to give us an idea of the long-term outlook, including the next few months.
It's time to move your money? Get 3 to 5% more currency 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 substantial amounts of money. Learn more here.
* Publicity
The book: politics remains the central engine, GDP Data Eyed
The main driver of the pound sterling in the coming week will likely be political uncertainty.
Rumors say that the next Conservative party leader – presumably according to Boris Johnson – will have little choice but to call an early parliamentary election before 2019 when he has no chance of to pbad a negotiated agreement on Brexit by parliament.
The hopes of seeing the very small conservative majority being overthrown in case Johnson tries to bring the UK to an "unbadigned" exit from the EU would leave the new prime minister with no other choice than the US. hope the country will support him in another vote.
However, general elections generally result in more political uncertainty and weaken the pound. The outlook is therefore broadly bearish from a fundamental point of view.
We will monitor the situation on this front over the next few days, while keeping a close eye on Johnson's campaign to gather suggestions on how he could organize Brexit.
The GDP data for the month of May is the main economic driver. They should post a rebound of 0.3% after a negative growth rate in April.
The UK's economic growth is a key factor in the pound as it influences capital inflows and a worse-than-expected outcome could negatively impact the already vulnerable pound.
"The economy probably underperformed its European partners in the second quarter, as the Brexit extension only prolonged the period of uncertainty for UK companies. UK GDP fell 0.4% in April and data expected Wednesday should allow GDP to recover by 0.3% in May, "said economist Raffi Boyadijian in XM.com.
The other main data published by Sterling are May's industrial and manufacturing output, which is expected to show a positive recovery, with April's statistics being "artificially" low due to exceptional factors.
"Industrial and manufacturing production also fell in April, as companies sought to reduce the large stocks they had built the previous month. In May, they should have rebounded 1.5% and 2.5% m / m, respectively. "
All major data releases are scheduled for Wednesday, July 10 at 9:30 am (Paris time).
The euro: what to watch
The main publication of the euro in the coming week will most likely be the publication of the minutes of the June meeting. European Central Bank (ECB) that will be examined for signs of what the ECB's future policies will be.
Analysts will mainly look for signs that more members of the Governing Council are calling for increased stimulus for monetary policy.
If that is the case, the euro will weaken.
"At the June meeting, the ECB refrained from a clear loosening bias, although President Draghi said some members had raised the possibility of a rate cut. The minutes of this meeting, due to be released on Thursday, should help to better understand these discussions, "said Raffi Boyadijian, an badyst at XM.com. "Although several signals have been reported since the June meeting, including by Draghi himself, additional stimulus could be considered, a dovish account could still put pressure on the euro, which fell back under the bar of USD 1.13 on declining euro area bond yields. "
Publication of the minutes is scheduled for Thursday, July 11 at 12:30 BST.
The other main data on the single currency concerns industrial production in Germany (Monday) and then in the euro area as a whole, on Friday.
The current slowdown in the euro area economy is mainly due to the slowdown in the manufacturing industry.
"The slowdown in the euro area economy has been defined by a lagging manufacturing sector and a resilient service sector. It is perhaps the best illustrated in Germany, the largest economy and the largest manufacturer in Europe. Factory orders in Germany contract at a pace never seen since the Great Recession, "says weekly economic overview of the investment bank Wells Fargo.
German industrial production is expected to rise 0.4% in May after a contraction in April, after publication at 7:00 BST.
In the Eurozone, a 0.2% rise is expected when published on Friday at 10:00 BST.
"From one year to the next, industrial production fell 0.4% in April, but this slight decline masks worrying trends in the details. Output of capital goods and durable consumer goods decreased by 1.2% and 0.8%, partially offset by growth in non-durable goods. Another decline in industrial production in sectors that are globally and cyclically sensitive would be a bad sign for the euro area economy, "says Wells Fargo.
Such a fall would probably weigh on the euro as well.
* Publicity
Source link
