[ad_1]
Image © Adobe Images
GBP / EUR finds support near the bottom of its recent range.
– But the downward trend remains intact despite the mixed signals of the charts.
– The incoming prime minister for the GBP while the EUR looks at the ECB.
The price of the pound to the euro should start trading around 1.1413 at the beginning of the new week after retreading from a familiar range of the previous one, although studies on the Graphics suggest that the pair is at an inflection point from which it could break in any direction.
The charts suggest that the price of the pound sterling to the euro is at a crossroads and that it could move back and forth, either lower or higher in the coming days, although we are in favor of 'a downward movement due to the recent downtrend.
The 4-hour chart, which we use to determine short-term prospects, including the next 5 days, shows that the pair rebounded after finding support at the bottom of July 17. The big question is whether this rebound marks the beginning of a higher turnaround or simply a temporary correction within the broader downtrend.
Above: exchange rate of the pound sterling per euro indicated every 4 hours.
For the moment, it is too early to say for sure whether last week's move is simply a correction in the context of a broader downtrend or whether it is about 39, a reversal of trend. While the rebound has two series of higher and lower, which is a positive sign, there is no other convincing evidence to support the idea of a reversal.
A break above the 19 July highs and the 1.1170 level would confirm a reversal upwards and suggest a target around 1.1235.
However, as the downtrend is still intact, we are in favor of a dip towards the lows around 1.1000, even if this leaves little margin for traders (less than half a cent).
Above: Pound to Euro rate shown daily.
The daily chart, which we use to badyze the medium-term outlook, including next month, shows the pair in a nice downtrend that should continue. A break below the lows of July 17 at 1.1048 would confirm a lawsuit at 1.1000.
The pair also shows bullish signs such as the fact that it has risen 3 days in a row, which is sometimes a feature of the turnarounds. However, this is not enough in itself to give confidence to an upward call.
The relative momentum indicator of the relative strength index (RSI) in the lower panel converges upwardly with the price, which means that the price makes new lows, but the RSI does not make similarly, but the effect of this convergence has already been observed to some extent in the 3-day rebound mentioned above.
Above: exchange rate of the pound sterling expressed in euro every week.
The weekly chart shows that the pair is ending its 11th week of decline. The badysis remains the same as that of the previous week.
The general trend is down, but the pair has formed a very convincing bull hammer candlestick at the lowest points, which could indicate that a bottom is in place. The hammer is longer than usual, although it is red and it would have been a stronger signal if it had been green (a day's work).
The momentum indicator RSI (circled) also appears to be increasingly rounding off, with the possibility of a slight rise over the forecast horizon, reflecting a similar recovery in prices.
As a result, there is a growing risk of a rebound, even if it is only a temporary risk, as the market finds a new level of equilibrium and traders close their bearish bets before the lowest of the key range.
In any case, a decline to 1.1000 would probably lead to a rebound in the established range, probably to the highest at 1600. The weekly chart is used to badyze the long-term trend, defined as the next few months. action of the market.
AA
The book: what to watch
The main engine of the pound this week will likely be the announcement of the winner of the July 22 presidential elections, but there is little difference between the two candidates' Brexit policies. The result may therefore not cause as much volatility. previously waited.
Jeremy Hunt is considered more "moderate" and less likely to take the UK out of the EU without an agreement. His election could therefore relieve a little Sterling. This is the reverse that occurs for Boris Johnson, who is the bookies favorite, but this result is probably tied to the price of the pound.
According to the Paris Oddschecker website, Johnson's chances of winning increased to 97.08%. In terms of data, the main publication is CBI's Industrial Trends Survey, which took place on Tuesday and a speech by bank of EnglandAndy Haldane, Chief Economist (BOE), the same day.
Andy Haldane is due to deliver a speech on Tuesday at 1:15 pm The market will be eager to hear his views on the economy after the recent mixed data. Earlier, the BOE had been one of the few major central banks not to expect interest rate cuts and was actually planning to increase them. It all depends on Brexit, of course. Will Haldane continue to adopt a slightly hawkish stance or will he become more neutral? Tuesday we will see. If it changes its tone, it could weigh on Sterling.
The CBI survey is generally followed closely as it provides a better understanding of changing industrial trends. Industrial production fell -2.7% in June and, although it rebounded 1.4% in July, this was a worrying and worst result since 2013. Investors will therefore have every interest in seeing this. that the CBI data reveal when it was released Tuesday at 11:00 BST. and if the sector is likely to see more declines in the future or not.
Above: Changes in industrial production in the United Kingdom. Source: Tradingeconomics.com.
AA
The euro: what to watch
The euro has a busy week ahead, with the European Central Bank (ECB) interest rate decision Thursday the most important event. But preliminary readings for the July SMIs released on Wednesday and the ECB's bank credit survey released on Tuesday are also important.
June's inflation came out slightly better than expected at 1.3% and 1.1% for the core, but markets now expect more than 50% chance that the ECB will lower its interest rate on Thursday. This could still weigh on the euro throughout the week as the discount is not yet fully integrated into the prices.
In other words, a reduction in ECB rates this week could strengthen support for the pound-to-euro rate in the coming days. The consensus is that the July manufacturing PMI will remain unchanged at 47.6% and the services PMI will slide from 53.6 to 53.3 when the data will be released Wednesday at 9:00 am BST.
"The euro area composite PMI – seen as a strong indicator of GDP growth – has risen slightly in recent months thanks to the improvement in the services sector. However, the manufacturing PMI remained stuck in negative territory as a result of increased trade and Brexit uncertainty. It is feared that the weakness of manufacturing will soon spread throughout the economy, "said badyst Raffi Boyadijian XM.com.
Finally, the ECB's bank lending survey released at 9 am on Tuesday could be another focus for investors, as higher lending will be critical to any economic recovery on the continent. If the survey reveals a decline, this will be another sign that growth is under threat and a red flag for the ECB.
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
Source link
