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EURGBP Ranges Between Triple Top and Fibonacci Support
Thu, Jul 31 2008, 13:16 GMT
by Ilya Spivak
Recent European fundamental data has turned decidedly downward. Monetary authorities in the Euro Zone and those in the UK find themselves in much the same predicament, having to contend with both cooling growth and rising inflationary pressure. This has kept policy on hold, with expectations of continued interest rate neutrality aiming to keep the Euro ranging against the Pound.
Trading Tip – EURGBP moves in tight daily ranges. As such, traders may have to exercise additional patience before seeing the trade reach either of the suggested targets. With the light calendar ahead, the pair may be flat through the weekend. In addition to a stop loss, we will look to control risk further by removing any unfilled orders by the end of the following week should spot close above 0.7975.
Event Risk for Europe and the UK
Europe – The remainder of the European calendar begins with Thursday’s release of the preliminary estimate of July’s Italian Consumer Price Index. Forecasts call for a reading of 4.2%, a new all-time high. Traders have priced in oil-driven inflation months ago, meaning the metric is unlikely to stir price action until its next release reflects the recent selloff in crude. The French Purchasing Managers Index comes into play Friday. The metric has been heading lower steadily, keeping below the key 50 mark since July 2007. More of the same is likely as Euro Zone sentiment follows economic performance lower. June’s German Retail Sales data is expected to deteriorate as a the slowing economy and rising living costs upset demand.
UK – After a nearly bare week for the UK docket, the last item left to go is July’s Manufacturing PMI. The metric is expected to sink deeper below the 50 “boom-bust” level to register at 45.5 as the economic downturn crimps demand both domestically and globally. Highlights for the following week will see the release of NIESR GDP estimates for July along with the Bank of England’s interest rate decision.
Published on Thu, Jul 31 2008, 13:18 GMT
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