The EUR/GBP surged higher this week to push above the 100-Day moving average for the first time since last October however, the lack of momentum to clear 0.8750-60 (50.0% Fib) may lead the pair to retrace the four-day rally, and we may see the pair continue to hold a broad range over the near-term as investors weigh the outlook for future policy.
Currency Pair: EUR/GBP
Chart: 60 Min Charts
Short-Term Bias: Flat
Analysis
The EUR/GBP surged higher this week to push above the 100-Day moving average for the first time since last October however, the lack of momentum to clear 0.8750-60 (50.0% Fib) may lead the pair to retrace the four-day rally, and we may see the pair continue to hold a broad range over the near-term as investors weigh the outlook for future policy. After reaching a low of 0.7694 in October, the euro-pound surged to a high of 0.9805 in December as the Bank of England took unprecedented steps to stimulate the ailing economy however, as the pair continues to lose steam ahead of 0.8750-60 (50.0% Fib), the pair is likely to hold its current range going into the following month as the BoE and ECB maintain a dovish policy stance. Nevertheless, Credit Suisse overnight index swaps show investors anticipate borrowing costs in the U.K. to rise at a faster pace than those in the euro-region as the Governing Council expects economic activity to remain subdued going into the following year, and the pair may fall back towards 0.8500-10 (61.8% Fib) as the interest rate outlook for the U.K. improves. Over the next few hours of trading, we are likely to see the pair fall lower to retrace the rally that carried over from the previous week, and may work its way below 0.8650 to fill-in the gap from the 120-SMA (0.8635) however, as the economic docket is expected to confirm a positive growth reading for Germany, the final 2Q GDP reading could drive the euro higher against its currency counterparts as the outlook for growth and inflation improves. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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