EUR/GBP Outlook: Larger bears temporarily on hold after weaker than expected UK CPI
EUR/GBP
The cross jumped to the session high at 0.8585 after weaker than expected UK inflation data deflated sterling.
UK CPI (y/y Oct 1.5% vs 1.6% f/c and 1.7% prev) fell to its lowest since Nov 2016, with BoE's expectations for further fall (towards 1.25%) before it starts picking up.
Weaker pound after data delays larger bears, but stronger upticks are so far unlikely, as overall picture remains bearish.
Daily studies show strong negative momentum, with double bear-cross (10/20DMA/55/200DMA death-cross) and completion of bearish flag on weekly chart, keeping bias with bears.
Tuesday's violation of short-term consolidation range low (0.8575) adds to negative signals, with repeated close below 0.8575, to generate fresh bearish signal for extension towards key supports at 0.8490/70 zone (6 May/13 Mar lows/monthly cloud top).
Daily Tenkan-sen (0.8607) marks solid barrier which is expected to cap and keep bears intact, guarding upper pivot at 0.8663 (200WMA).
Res: 0.8585; 0.8607; 0.8615; 0.8663
Sup: 0.8557; 0.8489; 0.8470; 0.8388
Author
Slobodan Drvenica
Windsor Brokers
Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.
