Key Highlights
- EUR/GBP recovered sharply from the 0.8280 support area.
- It is trading above 0.8400, but approaching a major hurdle near 0.8500.
- The UK Claimant count changed 28.8K in Nov 2019, more than the 24.5K forecast.
- The UK CPI could decrease from 1.5% to 1.4% in Nov 2019 (YoY).
EUR/GBP Technical Analysis
This past week, there was a massive decline in the Euro from the 0.8500 resistance against the British Pound. Recently, EUR/GBP found support near 0.8280 and recovered sharply above 0.8400.
Looking at the 4-hours chart, the pair traded as low as 0.8277 before starting a sharp rally. It climbed above many resistances near the 0.8400 area.
Moreover, there was a break above the 50% Fib retracement level of the last decline from the 0.8508 high to 0.8277 low. Besides, the pair rallied above the 0.8450 and 0.8460 resistance levels.
However, the pair ran into the same 0.8500 resistance area and the 100 simple moving average (red). There is also a connecting bearish trend line forming with resistance near 0.8505 on the same chart.
The next major resistance is near the 0.8525 and the 200 simple moving average (green). Therefore, a successful close above 0.8500 and 0.8525 is needed for further gains. If not, EUR/GBP could correct lower towards the 0.8450 and 0.8420 support levels in the near term.
Fundamentally, the UK Claimant Change and the employment report for Nov 2019 was released by the National Statistics. The market was looking for a chance of 24.5K in the count in Nov 2019.
However, the actual result was disappointing, as the count changed by 28.8K. On the other hand, the last reading was revised down from 33K to 26.4K. Besides, there was no change in the ILO unemployment rate from 3.8%.
The report added:
For the three months ending October 2019, the highest unemployment rate estimate in the UK was in the North East (6.1%) and the lowest was in Northern Ireland (2.3%).
Overall, EUR/GBP is facing an uphill task near 0.8500. More importantly, GBP/USD declined heavily in the past 3-5 sessions and it declined below the 1.3200 support area. Conversely, EUR/USD remained well bid above 1.1100.
Upcoming Economic Releases
- UK Consumer Price Index Nov 2019 (YoY) – Forecast +1.4%, versus +1.5% previous.
- UK Core Consumer Price Index Nov 2019 (YoY) – Forecast +1.7%, versus +1.7% previous.
- Euro Zone CPI for Nov 2019 (YoY) – Forecast +1.0%, versus +1.0% previous.
- Euro Zone CPI for Nov 2019 (MoM) – Forecast -0.3%, versus +0.1% previous.
- Canadian Consumer Price Index Nov 2019 (MoM) – Forecast -0.1%, versus +0.3% previous.
- Canadian Consumer Price Index Nov 2019 (YoY) – Forecast +2.2%, versus +1.9% previous.
